There are several of options.

1. Capital control just like what happened 1998.

2. Borrow USD from IMF, just like what happened on other crisis hit countries during 1998.

3. Issue USD denominated bond, instead RM, currently bulk of national borrowing is in RM.
Frankly speaking this is short term solution only, not something recommended.
1998 crisis imploded partly because there were plenty of borrowing in USD/Yen denominated. It was a messy situation when those borrowing currency rose.

Instead of keep on defending RM and intervening the forex market that may exhaust the foreign currency reserves, require exporter to convert is one way bring in USD, and create more demand for RM, hence lesser volatile movement for RM.

4. Raise interest rate, by then domestic bond yield become more attractive, more capital inflow.

5. Any type of measures that can induce higher trade surplus and current account surplus.

6. Adopt more currencies swap between agreed countries, that reduce the demand for USD.

Frankly speaking, there is no urgency for 1, 2, & 3 for time being, as foreign currency reserves still able to cover for short term debt, although not by big margin.
We need to see how the trend and how situation is unfolding. There is simply too much uncertainty factor out there.
Little people expected Trump to win the presidency speaks how today world become so unpredictable.




This post has been edited by cherroy: Dec 19 2016, 04:38 PM

Low interest rate since 2011 has resulted in mis-allocations of credit to unproductive sectors e.g. residential property bubble. To realign credit to productive sectors, interest rate should rise by 200 basis points over the next 2 years.

these "experts" are just selling snake oil with the idea, "what comes down will go up" - automatically, by itself, no need to do anything.

but we know certain things like gravity... "what comes down stays down" or what goes down can go down further" - until new powerful forces come into play.

at this time, there is only one new force - BNM intervention with reserves.

dr m did not do that in 1998 due to the conditions imposed by IMF.
the same conditions will apply now - and will be rejected.
becos the conditions will be about nep, civil service, mega projects.

going back to 1998, certain things happened to help the turnaround besides the peg. will current gomen do something like that or stick to "it will rebound (by itself)"?

This post has been edited by AVFAN: Dec 19 2016, 05:14 PM

Still DCI is available.

Borrowing from IMF would be like borrowing from a Loan Shark, a Global Loan Shark. It would allow them to exert enormous leverage over the economies as well of policies of running the country.

Heard Dr M had a Jew as an economic advisor by his side then. Not sure how true it was.

the indisciplined ones will become more miserable.

some made it good with IMF - thailand got out of the mess with IMF borrowings quite quickly.

so did ireland more recently.



like any borrowing, it is only good if used properly for financially sound purpose(s).

hence the IMF conditions.

for greece or any country.

no handicaps, no privileges, no special rights.

Just a reminder,
Please focus on financial issue aspect, and refrain from any potential further political talk, as this is a financial section, so that the topic is not deviated.

Thank you

The biggest mistake during that time, was the so called plenty of international expert advice by using high interest rate to counter the on going crisis.

All crisis hit countries be it IMF aided or non recovered after the interest rate was lowered down to be more optimum level, instead in double digit rate.

we watch for this...



what and how decreased output and price change will impact revenues, dividends, debt... and budget 2017... and the RM.

MOF: Don't panic, ringgit will bounce back
http://www.thestar.com.my/news/nation/2016...ll-bounce-back/

meanwhile another report..

Emerging currencies, including ringgit, to remain volatile next year, World Bank official says
http://www.themalaymailonline.com/money/ar...h.KGMKQlOl.dpuf

This post has been edited by nexona88: Dec 19 2016, 06:59 PM

Don't see how ringgit will not drop further since FED is planning to raise interest rates aggressively next year. Let's see if our governator dares to make surprise raise cut again..

What are the steps taken by the government to strengten the Riggit?

No step taken for now..
More like interfering to make sure myr don't get weaker & move toward 5.00

I agree, sir. Though, in your opinion, what form of hedging can the common public have? and what strategy?

i'm afraid there is no good answer to yr question.

common public = ?

this topic started 2 years ago:
https://forum.lowyat.net/topic/4140626

if u read enough, u will find diff people did diff things.

if new, do check the various threads in this section - fd, fsm, gold, reits, unit trusts, dci, foreign equities.

gold really bleeding atm and our rate is way to low for fd returns. I think they should start pushing up the rates soon. them as in BNM

Cannot hike rate also or lots of people will default. Some people borrow personal loan to go for monthly spa/shopping spree/yearly holiday.

Those who experienced 1997 would know better. 10% interest rates for car loans.

Yes, when petrol prices soar, so will price of goods and inflation will rise. So will RM appreciatiate just because global petrol prices go up?

I agree with that. Thats the only few positive ways to prevent so much outflow of the RM. However, I agree that local consumption will suffer too. Markets are already slow now.