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 USD/MYR v5

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cherroy
post Dec 8 2016, 09:48 AM

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QUOTE(prophetjul @ Dec 8 2016, 08:41 AM)
i know i asked this before...........

while those who invested outside heavily can pat theirselves on the back and be smug.....think of the rest who have not.

HOW much do you hedge your net worth in foreign assets  IF you are NOT MIGRATING?
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In today investment environment, it is hard to assess and quantify.

Just like my previous example, if one has YTLreit, one has exposure to Aud, and indirectly hedge against RM (with high portion) with AUD/Aussie properties.

While if one invested in Starhill Global Reit in SGX in Sgd, one is indirectly has exposure back to RM (although it is small portion only) with Starhill in its portfolio.

While one put money in gold, one has hedge against RM with USD.

Although the gold investment is in RM and the gold investment is in local, and perceived as non-foreign asset, one indirectly has hedge in USD which is identical owning USD.



cherroy
post Dec 13 2016, 10:14 AM

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QUOTE(Ramjade @ Dec 13 2016, 09:34 AM)
What if I as an exporter decided to have offshore account in SG/UK/HK and ask my clients to bank in the money into those account. That way, I don't need to convert my earnings into RM right? Just a thought  hmm.gif
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This was what happening prior before the new rules.

But if company continue to do this after the new rules set, then it clearly break rules.
Not something company want to do to disobey what BNM or authority has ordered.


cherroy
post Dec 13 2016, 10:32 AM

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QUOTE(Ramjade @ Dec 13 2016, 10:22 AM)
BNM does not have control over offshore account. One can simply tell their clients/customer to bank in 100% into offshore account and return back 25% to Malaysia. I can't see how this ruling can force exporters to comply especially when BNM does not have control over offshore accounts unless they track all exports and invoke a fine on the exporters who don't comply.
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BNM doesn't need to cross check with Offshore bank or need to track every single export.

You issued tax invoice on 13/12/2016, and the goods being delivered worth 10 mil to overseas clients, after 3 or 6 months later, where is the 7.5 mil sales proceed?
Fail to show/explain, break the rules.

cherroy
post Dec 13 2016, 11:10 AM

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QUOTE(Hansel @ Dec 13 2016, 10:37 AM)
Knowing our govt,... 3 or 6 months later,...everybody will forget abt it, people would have changed, documents missing, hard disk crashed,...  smile.gif

Unless they happen to target one or two lar,... see who 'gets the lottery',... BNM also wants to have an easier life,....
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Running an export company with millions of export revenue, you don't want to risk such thing.

Business just want to make business and profit, they won't want to break any rules that lead to complication to their businesses.




cherroy
post Dec 19 2016, 04:30 PM

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QUOTE(Hansel @ Dec 19 2016, 02:24 PM)
Frankly,... if BNM keeps sending more and more of her foreign reserves to defend and still the USD keep hammering,... what happens ??

Exporters must convert 75% back to MYR, that's the first step.

Second step ?

Surely cannot be just continue to defend until NO MORE reserves, right ?
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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
cherroy
post Dec 19 2016, 05:19 PM

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QUOTE(xpmm @ Dec 19 2016, 05:11 PM)
just came back from hsbc chatting with staffs there. bnm now control very tight. all dual currency investment clients must declare loan free, otherwise cannot DCI anymore.
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Still DCI is available.


cherroy
post Dec 19 2016, 05:38 PM

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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
cherroy
post Dec 19 2016, 05:44 PM

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QUOTE(TOMEI-R @ Dec 19 2016, 05:23 PM)
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.
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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.


cherroy
post Dec 22 2016, 10:23 AM

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QUOTE(bbgoat @ Dec 21 2016, 07:37 PM)
Nope !  laugh.gif

I guess you guys has given enough expert opinion on this. Did not ask any further. She was trying to sell me USD foreign retail bonds.  laugh.gif
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I don't think one needs to become an "expert" to know USD is super strong now... laugh.gif


cherroy
post Dec 22 2016, 09:57 PM

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QUOTE(Hansel @ Dec 22 2016, 08:02 PM)
BUT : LOOK AT THE ALL ORDINARIES AND THE S&P/ASX 200 !! THEY HAVE BEEN RISING AND RISING IN THE LAST 10 DAYS WHEN MANY OTHER INDICES ARE FALLING.

Why is this ??
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Since after the poor GDP number released by Aus, market bet RBA to lower the interest rate, that's why we saw Aud went down while stock market is cheering when rate is going down since then.
cherroy
post Dec 23 2016, 10:15 AM

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QUOTE(Century1 @ Dec 23 2016, 08:27 AM)
KUALA LUMPUR (Dec 22): Bank Negara Malaysia's (BNM) international reserves was unchanged at US$96.4 billion (RM399.7 billion) as at Dec 15, 2016, compared with two weeks earlier.

This is a stupid article. Why done we compare with yesterday?

Even BN governor tries to calm the market by showing increase in reserves in a week.

Last year was US$144billion
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Nothing stupid.
Fyi, BNM has been releasing foreign currencies reserves status for every 2 week since long time ago.


QUOTE(Lcclcc @ Dec 23 2016, 09:31 AM)
if someone with the knowledge can share, if BNM's international reserves stood at US$96.4 or RM399.70?

From the market value, US96.4 x 4.46 will be RM429.944billion.
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BNM normally only doing quarter adjustment on the exchange rate of USD vs RM, so the equivalent in RM term we see now still using last Q rate.
So next Q, we may see the adjustment.

Foreign currencies reserves matter in USD term, as it is mainly denominated in USD, as trade are mostly in USD settlement.

cherroy
post Dec 27 2016, 03:28 PM

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QUOTE(Hansel @ Dec 27 2016, 01:52 PM)
Good opinions there, bro,.... thumbsup.gif

Probably, to each his own,... but for myself, the impt questions are :-

1) how long will the RM weaken vs the other major currencies, and how far will it drop before it stabilizes ? This is with the assumption that the BNM can continue to defend the RM.
2) what will BNM do next to 'defend' the currency, eg, will it stop our funds from moving out freely ?
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1) The correct answer of your question worth billions of dollar/RM.
The one get it right can easily earn a big fortune.

Nobody can guess RM vs USD strengthened to RM3.20, when it was initially pegged at Rm3.80 time 18 years ago.
while little people predicted RM to depreciate to Rm4.47 prior before the US election, sums up how difficult to have a guess game in financial world.

2) by seeing the latest measures, foreign currency reserves status and RM movement, there is no urgency need for full pledged capital control like 1998.

The more important questions one should mind of

1) what if RM weaken, is my investment portfolio able to stand it, or benefit from it.
2) what if RM strengthen, is my investment portfolio is going to suffer, or how to benefit from it.
3) is my portfolio is diversified enough to weather the uncertainty environment.
4) where is the opportunity if those situation happening.

cherroy
post Dec 27 2016, 03:33 PM

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QUOTE(AVFAN @ Dec 27 2016, 03:01 PM)
this, i think is too hypothetical, not in the current picture.

there is room for other options, although none is pretty.

what we are seeing now... intervention at 4.47/4.48... looking like what they call a "crawling peg".

i am still reading about the most recent cases - mexican peso 1994, thai baht 1997, kazakhstani tenge 2015, egyptian pound 2016.

some interesting stuff in those stories.

one thing common to all of them - in the end they all devalued, and hike interest rates to combat hyperinflation.
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The main purpose of hiking of interest rate in those situation was for reducing the capital flight.
cherroy
post Dec 30 2016, 04:44 PM

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QUOTE(bbgoat @ Dec 30 2016, 03:46 PM)
Having learn from taikors here, trying to diversify to other currencies. Still learning.

Coupon rate of 4% is low. I was shown effective returns like 1 to 7.5% depending on maturity and current price. Minimum purchase is like 250k in S$, US$ or A$ though some bonds may be lower. UK pound is 100k.

If do Reverse REPO can borrow from bank to offset initial purchase MYR needed to put in.  biggrin.gif
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No way good rating bond is more than 6% yield

Most I knew are in the region 4~5%.

Use DCI to convert first before purchase the bond, is another alternative.
cherroy
post Jan 5 2017, 04:42 PM

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Today USD index weakness has something to do with RMB, that short position of RMB offshore is scrambling to cover.

http://www.cnbc.com/2017/01/04/chinas-offs...-in-a-year.html
cherroy
post Jan 6 2017, 05:12 PM

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QUOTE(Avangelice @ Jan 6 2017, 05:03 PM)
where all the reserves come from?
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Foreign currency reserves come from accumulated overseas money exchange to local currency.

When someone exchange USD1000 to RM4500 time though onshore banks, BNM will receive USD1000, and the USD1000 will be kept in the foreign currency reserves.
cherroy
post Jan 6 2017, 10:52 PM

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QUOTE(Avangelice @ Jan 6 2017, 05:32 PM)
that means they are spending at a rate of 2 billion to keep the currency afloat at its current level?I wonder how long will it take to "grow" back our reserves
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Foreign currency reserves rise when more money (mainly USD) being exchanged into RM, to invest in MGS, KLSE, portfolio investment, trade and account surplus money flowing back to onshore.

Foreign currency reserves drop when money outflow from local investment avenue (as above mentioned) in term of RM to overseas, as investors need to exchange RM to USD before they can repatriate to overseas as you can't send money to overseas in RM form.
cherroy
post Jan 7 2017, 12:12 PM

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QUOTE(lucifart @ Jan 7 2017, 11:51 AM)
The entire fiat money system is a imaginary scam anyway...and now they are moving into cashless system where money can be created out of thin air by typing in...I told my friend this but most say im bs...im not too sure in da future pipu will realiaze caseless system is a way to insta slave them lol hopefully im wrong about the future and people will wake up to wut real weal wealth is
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Cashless vs real cash are actually the same in the financial system and banking.
Real hard cold cash just means extra process of printing it.
Just like E-statement, E-invoice, E-ABC, just less one process of printing it, doesn't mean they are not existing or not real.
You have 10,000 in account (cashless), if you want hard real cold cash, bank just debit your account (your 10,000 no more), then ask BNM to supply them 10,000 cash note.

Cashless /= anyone can simply type a number, nor bank can simply create a number in the account.

The one can create money out of thin air (USD) is Fed, Euro (ECB) and for other countries currency, it is respective central bank, but other central banks (other that major currencies in the world) do not have the luxury of like USD that can simply print without financial/exchange repercussion.

It is how fiat money system works and agreed and adopted by everyone. Nothing relate to whatever imaginary scam, those saying it is scam because they don't understand how financial, monetory system works.
cherroy
post Jan 7 2017, 12:35 PM

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QUOTE(spiderman17 @ Jan 7 2017, 12:26 PM)
what i understand is that bank do create money, or the illusion of it, through lending. this is of course governed by central lank, controlling the reserve requirement.
i put rm100 in bank. he lends out 80 to bizA. bizA pay out in total 80(expense, profit to owner etc), whch eventually go to bank. then bank lend out  0.8*80....and the cycle flow
given that it's less than 1(100%), the exponential series will hit asymptotic value which control the total money circulating in market. It's much larger than 100 initial money.
isn't that how srr works in adjusting inflation?
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It is the process of fiat system lending that multiply the money effect, banks do not print the money of out of thin air simply by themselves, aka they do not add extra 0 or any number in the account.
They need take in 100 deposit or borrow from somebody else, only then they can lend out 100.

While the 100 that being lend out that could result a 200 deposit flow back to the bank, then bank can lend out 200 again.

This is called multiply effect, one can say it is created out of thin air, (it is not the same thin air as Fed printing money) but it is not simply by plucking a number by banks, it needs a deposit + lending effect, aka a cycle to have the multiply effect.

Reserves requirement is to reduce the extra liquidity in the financial system, as well as act as buffer liquidity, aka a tool to tweak the liquidity level of the financial system.

If BNM set 3% SRR (statuary reserves requirement) means
when bank receives 100 deposit, they cannot lend out 100 totally, they need to put 3 aside with BNM and the rest 97 can be used to lend out to borrower.

This post has been edited by cherroy: Jan 7 2017, 12:38 PM
cherroy
post Apr 4 2017, 10:55 AM

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Please post at RWI section for anything related to politic.

Just to avoid finance section topic deviated too much into political issue.

Ty.

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