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Banana currency … is the Ringgit heading towards this?
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Malaysians begin to lose confidence in Madani’s financial and economic governance
KUALA LUMPUR, Feb 21, 2024: Wheneever the Ringgit slumps, the so-called Madani Unityy Government and Bank Negara are quick to sing the same song.
This is the lyric: “The recent performance of the ringgit, like other regional currencies, are impacted by external factors such as market adjustments to shifting US interest rate expectations, geopolitical concerns and uncertainties surrounding China’s economic outlook.
“Bank Negara is of the view that the current level of the ringgit does not reflect the positive prospects of the Malaysian economy going forward.”
How lame can the Government and Bank Negara get. Why is our tiny neighbour Singapore not hit by external factors?
In fact, No News Is Bad News had posted the Ringgit’s woes on Monday (Feb 19) (see below).
We reproduce below articles posted today by suspected CIA-backed news portal Malaysia Chronicle, a Finance Twitter article reposted by The Coverage and our Monday (Feb 19)'s posting on the same issue:
THE WORST IS YET TO COME - DARK DAYS FOR THE RINGGIT, EVEN DARKER TIMES FOR MALAYSIA - AS ANWAR CASTS HIS 'JINX' OVER THE ECONOMY, LOCAL CURRENCY
ECONOMY, LOCAL CURRENCY - ALREADY AT 26-YEAR LOWS, EVER-SINKING RINGGIT HITS NEW ALL-TIME BOTTOM AGAINST U.S. & SINGAPORE DOLLAR
posted by politics now! on February 21, 2024
THE WORST IS YET TO COME - DARK DAYS FOR THE RINGGIT, EVEN DARKER TIMES FOR MALAYSIA - AS ANWAR CASTS HIS 'JINX' OVER THE ECONOMY, LOCAL CURRENCY
A dark day for the ringgit
The recent weakness in the ringgit was partly due to the soft economic expansion.
It was a double whammy day for the ringgit, with the currency falling to a new all-time low against two closely compared currencies – the US dollar and the Singapore dollar.
To calm the markets, Bank Negara had to issue a statement yesterday, pointing out that “most analysts are forecasting for the ringgit to appreciate this year”.
Second Finance Minister Datuk Seri Amir Hamzah Azizan, in his maiden interview with Bernama, however, refused to forecast the year-end target for the US dollar-ringgit exchange rate.
Nevertheless, he said the government’s efforts to bring in foreign direct investments would help to improve the ringgit’s performance.
The ringgit hit RM4.7987 against the US dollar yesterday, diving below the Asian financial crisis-low of RM4.7125 when the market closed on Jan 9, 1998 amid severe currency speculations in the region. The exchange rate hit an intraday high of RM4.8850 in the same month that year.
The ringgit also suffered another blow yesterday, as it spiralled to a fresh low against the Singapore dollar, closing at RM3.5682 to the Singapore dollar.
The positive trade data announced yesterday hardly helped to support the battered ringgit.
Malaysia’s exports in January rose 8.7% year-on-year to RM122.43bil, marking the first expansion in 11 months.
The recent weakness in the ringgit was partly due to the soft economic expansion reported last week, whereby annual gross domestic product growth for 2023 missed the official forecast.
The ringgit was also hammered by the fact that the Malaysian capital market recorded its second consecutive month of net foreign outflow, driven by a bigger sell-off in domestic bonds.
In a statement yesterday, Bank Negara governor Datuk Abdul Rasheed Ghaffour said the recent performance of the ringgit, like other regional currencies, are impacted by external factors such as market adjustments to shifting US interest rate expectations, geopolitical concerns and uncertainties surrounding China’s economic outlook.
“Bank Negara is of the view that the current level of the ringgit does not reflect the positive prospects of the Malaysian economy going forward.”
Reuters reported yesterday that emerging Asian currencies also weakened against the US dollar, while the Chinese yuan slid after China cut its benchmark mortgage rate by more than expected but found support from state bank buying.
The South Korean won and the Taiwanese dollar inched 0.2% and 0.4% lower, respectively.
“Negative rate differentials with the United States have translated into capital outflows and corporate hoarding of US dollars, exacerbating the downward pressure on the ringgit,” Nicholas Chia, macro strategist at Standard Chartered, said.
Meanwhile, the Chinese yuan was last flat at 7.199 per dollar, after touching its lowest level in three months earlier in the session.
Sources told Reuters that China’s major state-owned banks were seen selling dollars in an attempt to arrest weakness in the yuan in the wake of a deep cut to the benchmark mortgage rate.
China cut the five-year loan prime rate, the benchmark reference rate for mortgages, by 25 basis points (bps) to 3.95% at a monthly fixing, as authorities ramped up efforts to stimulate credit demand and revive the property market.
That was a deeper cut than the five-to-15-bps reduction market watchers polled by Reuters had expected and was also the largest cut since the reference rate was introduced in 2019.
Shanghai stocks closed 0.4% higher. They had fallen as much as 0.8% earlier in the session.
Equities in Kuala Lumpur rose 0.9% to their highest level since early-June 2022, and stocks in Manila rose 0.8%.
Stocks in Seoul dropped 0.8%, as investors booked profits after a recent rally.
Thailand’s stock market fell 0.6% and the baht weakened as much as 0.6% to its lowest level since Nov 1, 2023.
Data on Monday showed Thailand’s economy unexpectedly contracted in the fourth quarter of 2023.
Prime Minister Srettha Thavisin said the economy was in a critical stage and again urged the central bank to cut interest rates without waiting for a scheduled meeting.
Srettha, also the finance minister, has been at loggerheads with the Bank of Thailand (BoT) over its monetary policy path.
“Given the very weak economic data yesterday, the BoT is under heavy pressure from various fronts to ease rates and we would not rule out the risk that they may have to start an easing cycle with multiple cuts ahead of the Federal Reserve,” analysts at Maybank wrote.
The BoT’s next meeting is scheduled for April 10.
In Indonesia, the rupiah inched 0.2% lower while stocks were up 0.6% ahead of Bank Indonesia’s (BI) rate decision today.
Economists in a Reuters poll expect BI to keep its key policy rate unchanged on the back of subdued inflation and an improving currency outlook and see the first rate cut in the next quarter.
Malaysian ringgit at 26-yr low
Malaysia's ringgit reached a 26-year low as emerging Asian currencies weakened against the dollar on Tuesday, while the Chinese yuan slid after China cut its benchmark mortgage rate by more than expected, but found support from state bank buying.
The ringgit weakened as much as 0.2% to its lowest level since January 1998. The South Korean won and the Taiwanese dollar inched 0.2% and 0.3% lower, respectively.
"Negative rate differentials with the U.S., have translated into capital outflows and corporate hoarding of USD, exacerbating the downward pressure on the ringgit," Nicholas Chia, macro strategist at Standard Chartered, said.
Meanwhile, the Chinese yuan was last largely unchanged at 7.198 per dollar, after touching its lowest level in three months earlier in the session.
Sources told Reuters that China's major state-owned banks were seen selling dollars in an attempt to arrest weakness in the yuan in the wake of a deep cut to the benchmark mortgage rate.
China cut the five-year loan prime rate (LPR), the benchmark reference rate for mortgages, by 25 basis points to 3.95% at a monthly fixing, as authorities ramped up efforts to stimulate credit demand and revive the property market.
That was a deeper cut than the five to 15-basis point reduction market watchers polled by Reuters had expected and was the largest cut since the reference rate was introduced in 2019.
Shanghai stocks were flat, while those in Seoul dropped 1.2%, as investors booked profits after a recent rally.
Equities in Kuala Lumpur rose 0.5% to their highest level since early-June 2022, and stocks in Manila rose 0.4%.
Thailand's stock market, however, fell 0.5% and the baht weakened as much as 0.6% to its lowest level since Nov. 1, 2023. Data on Monday showed Thailand's economy unexpectedly contracted in the fourth quarter of 2023.
Prime Minister Srettha Thavisin said the economy was in a critical stage and again urged the central bank to cut interest rates without waiting for a scheduled meeting. Srettha, who is also finance minister, has been at loggerheads with the Bank of Thailand (BOT) over the direction of monetary policy.
"Given the very weak economic data yesterday, BOT is under heavy pressure from various fronts to ease rates and we would not rule out the risk that they may have to start an easing cycle with multiple cuts ahead of the Fed," analysts at Maybank wrote.
The Bank of Thailand's next meeting is scheduled for April 10. In Indonesia, the rupiah inched 0.2% lower while stocks were up 0.6% ahead of Bank Indonesia's (BI) rate decision on Wednesday.
Economists in a Reuters poll expect BI to keep its key policy rate unchanged on the back of subdued inflation and an improving currency outlook and see the first rate cut in the next quarter.
— Agencies / ANN
Politics Now!
The Coverage/News/Ringgit Is The Worst Currency In The Southeast Asia – Foreign Exchange Market Has Lost Confidence In The Malaysian Government
Ringgit Is The Worst Currency In The Southeast Asia – Foreign Exchange Market Has Lost Confidence In The Malaysian Government
22 February, 2024
Meaning the Malaysian Ringgit is hitting its 26-year low today largely because the US$7.5 trillion daily-foreign-exchange-market has increasingly lost confidence in the Malaysian government. Make no mistake – the FOREX doesn’t care about anything except the country’s policies.
If it was entirely external factor’s fault that the Ringgit is being dumped, how do you explain that neighbouring Singapore dollar has appreciated against the greenback? The Malaysian currency has slid by over 4% so far in 2024, and in the last 12 months, it is the worst currency in the Southeast Asia – losing 6.57%, almost double the second worst currency Thai Baht.
Making money in the forex (foreign exchange) is quite easy – just listen to research firms such as MIDF or Malaysian Industrial Development Finance, and bet the opposite. Led by a bunch of clueless management and researchers, the firm that specializes in development finance, investment banking, and asset management provides the best advice for investors to make truckloads of money.
For example, about two weeks ago, MIDF Research confidently said the local currency is expected to strengthen towards 4.20 against the U.S. dollar by year-end. It argued that the appreciation of the Ringgit will be supported by a decrease in interest rate differentials between both currencies, betting that the U.S. Federal Reserve would cut its interest rate. It also bet China’s economy is expected to recover.
While it’s only February, you don’t need to be a currency scientist to see how pathetic and ridiculous the research house’s projection is. Yesterday, the Ringgit briefly breached 4.80 against the dollar – its weakest level since reaching an all-time low of 4.8850 in 1998. Worse, China’s consumer prices fell at their fastest pace in 15 years in January 2024, forcing it to cut 5-year loan rate to 3.95% – the largest one-time cut.
It seems the Ringgit is screwed – regardless whether the U.S. raises its interest rate or China cuts its interest rate. While the U.S. and other Western economies struggle to bring down high inflation, China is facing the opposite problem – deflation. In the U.S., people continue to spend despite prices hitting the roof. In China, people refuse to spend despite falling prices.
Last month, the Fed decided to hold its benchmark borrowing rate in a range between 5.25% and 5.5%. The consumer price index in January 2024 was 3.1%, down from 3.4% in December 2023. However, the inflation rate was higher relative to a year earlier (January 2023). Meaning the inflation was hotter than expected and many Americans are still feeling the pinch.
The US Bureau of Labor Statistics revealed that the index was driven higher in January by the rising cost of shelter, motor vehicle insurance, and medical care. Although the inflation rate has dropped from its 22-year high, the Federal Reserve has made it very clear that they won’t cut the interest rate until it is “more confident” that inflation is moving “sustainably” to their target 2%.
In fact, the Fed had dropped many hints since last year that they actually had no idea whether it should cut the interest rate or not. They fear that if they cut rates now and inflation re-accelerates, then the Fed could be forced to raise rates again, making them very foolish. The problem is the economy and the job market appeared to be booming despite the current high interest rate.
So, what if the U.S. economy continues to grow and thrive even without any rate cuts? Some officials argued that since everything looks good now (low unemployment, booming economy, lower inflation), the Fed should leave the current high interest rate as it is without any urgency to aggressively cut it. This could be the magical “soft landing” the Fed was looking at.
However, other officials argued that the longer the borrowing rates stay at the current high level, the higher the risk that many companies and consumers would stop borrowing and spending. This could weaken the economy and potentially sending it into a recession. In its balancing act, the Fed most likely will delay the rate cuts as it has no need to rush to reduce borrowing costs.
This is not the first time MIDF got its projection upside-down. The research house said last March the Ringgit will reach RM4.00 against the U.S. dollar by end 2023. When that did not happen, the clueless analysts said in Oct 2023 that they were still confident that the currency will end the year at least at RM4.30. Of course, it got it all wrong as Ringgit was the worst currency in Asia after the Japanese Yen.
Joining the bandwagon of ignorance, the central bank – Bank Negara Malaysia – said the Ringgit’s performance does not reflect the country’s economic strength. The clueless Central Bank Governor Abdul Rasheed Ghaffour, like a broken record, has blamed external factors such as the U.S. interest rate, geopolitical concerns and uncertainty surrounding China’s economic prospects.
Like MIDF, the central bank insists that it expects the local currency to appreciate this year based on the assumption of an improving global economy, the government’s commitment to implement structural reforms, and the expected lowering of interest rates in advanced economies. If this is the best Bank Negara can do, perhaps PM Anwar should hire a primary school student as its governor.
Here’s a question for the central bank. Why did the currency surged by 1.8% right after Anwar Ibrahim’s appointment on Nov 24, 2022 as the 10th Prime Minister – the largest single-day gain since March 2016? It appreciated from RM4.74 to RM4.24 (30 Jan, 2023). For two months, the Ringgit strengthened tremendously due to foreign investors’ confidence in the new leadership.
The same external factor – investors’ confidence – then drove the currency from RM4.24 to the current RM4.80. Meaning the Malaysian Ringgit is hitting its 26-year low today largely because the US$7.5 trillion daily-foreign-exchange-market has increasingly lost confidence in the Malaysian government. Make no mistake – the FOREX doesn’t care about anything except the country’s policies.
If it was entirely external factor’s fault that the Ringgit is being dumped, how do you explain that neighbouring Singapore dollar has appreciated against the greenback? The Malaysian currency has slid by over 4% so far in 2024, and in the last 12 months, it is the worst currency in the Southeast Asia – losing 6.57%, almost double the second worst currency Thai Baht.
All the countries in the region – Singapore, Thailand, Vietnam, Indonesia and the Philippines – faced the same external factors blamed by Malaysia. Yet, their currencies did not drop like the Ringgit. It was so bad that three out of four (75%) Malaysians working and living in Singapore are skilled or semi-skilled workers, thanks to brain drain as a result of racism and discrimination policies.
Yes, unlike Singapore’s good governance and strong monetary policies, which allowed the country to follow suit when the U.S. started raising interest rate, Malaysia had to halt its interest-rate hikes at 3% compared to U.S.’ 5.5%. It makes Singapore a more attractive destination for capital compared with Malaysia to investors interested in parking their money.
The fact that the Ringgit hit a record low against Singapore dollar proves that the weakness of local currency cannot be blamed on high interest rate in the U.S. or on the low borrowing rate in China. It’s due to the low demand for the currency in the international market. In 2023, Mainland China, the United States and Malaysia were Singapore’s top trading partners.
Therefore, the Chinese economy will affect Singapore the same way it impacts Malaysia. While China, Malaysia’s largest trading partner, contributed 17.1% to the country’s total trade in 2023, the world’s second largest economy accounted for 10.1% of Singapore’s total trade in the same year. The best part is Singapore’s economy only grew 1.1% in 2023, but Malaysia’s growth was 3.7%.
In 2024, Malaysia believes its economy would grow stronger at 4%-5%, whilst Singapore growth forecast is merely 1%-3%. Yet, the Ringgit becomes increasingly worthless while the Singapore dollar becomes the gold standard in the region. The fact that the Bank Negara Malaysia Governor could only offer childish excuses speaks volumes about the country’s incompetence.
Sure, blaming the Chinese sagging economy is the easiest way out. However, that won’t stop foreign investors from avoiding the country like a plague. Why should foreign investors believe in the Ringgit when even local exporters have very little faith in the local currency, refusing to convert the revenue generated from exports into Ringgit because they believe it is doomed?
In truth, the investors do not like Anwar government’s excessive religious politics as it shows the unity government was fragile. They don’t like the emergence of radical Islamic politics, which is growing stronger with each passing day because the government was too afraid to take the necessary actions to nip it in the bud. And they certainly don’t like Anwar’s anti-corruption empty rhetoric.
In truth, the investors do not believe the Anwar Administration is capable of fixing the balance deficit, which is growing faster than a speeding bullet, let alone reducing the RM1.5 trillion national debt inherited from previous corrupt administrations. To pay the salaries of the 1.71-million bloated civil servants alone, RM95.6 billion (24.3% of Budget 2024) was needed.
Retirement for government pensioners would burn another RM32.4 billion (8.2% of Budget 2024). Worse, in order to appease the government staffs, 90% of whom are Malay voters, Prime Minister Anwar Ibrahim has agreed to increase their salary. Without political will to downsize the world’s most bloated civil service or to scrap the pension scheme, it would only drain the national coffers.
The pause on the overnight policy rate (OPR) hikes was a mistake as it intensifies capital outflow to take advantage of higher returns in the United States. But the policymakers have no choice because to raise interest rates further could kill local businesses. However, the damage could be worse as the worthless Ringgit will make imports so expensive that it could also kill consumption and local businesses.
Prime Minister Anwar can scream till blue in the face about de-dollarization, Palestinian solidarity program, Bumiputera Economic Congress, dubious reforms, RM347 billion in FDI (foreign direct investment), Madani Economy and whatnot. But the investors are not stupid. They could judge after a year whether he is a reformist or just a chameleon who tries to please everyone without achieving anything.
In reality, his government’s approval ratings have plunged to 41% in 2023 from 61% in 2022. The trumpeted RM347 billion FDI and de-dollarization are distant water that can’t quench a fire nearby. In reality, investors could see how the Palestinian solidarity program in schools exposed schools exposed the existence of radicals and extremists in the education system.
In reality, investors do not believe in Anwar’s reforms after Deputy Prime Minister Ahmad Zahid’s 47 money laundering and corruption charges were thrown out, followed by 50% discount “royal pardon” for former Prime Minister Najib Razak’s 12-year jail sentence. More importantly, investors have no confidence that Malaysia will not turn into a Taliban state after the next 16th General Election.
Source : Finance Twitter
Monday 19 February 2024
US$1-RM4.79 … and morons are asking for Bank Negara’s OPR hike
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Potential banana currency
US$1-RM4.79 … and morons are asking for Bank Negara’s OPR hike
KUALA LUMPUR, Feb 19, 2024: The Ringgit hit RM4.78 against the US Dollar today and ended the day at RM4.79!!!
But the worse is yet to hit Malaysia’s financial and economic woes.
According to syedsoutsidethebox.blogspot.com, some morons who do not know anything about business or finance are making suggestions that Bank Negara's OPR be increased again from its present 3%.
No News Is Bad News reproduces below the blogpost that was reposted by suspected CIA-backed political news portal Malaysia Chronicle:
REGIME COULD HAVE KEPT APACE, THEY WERE ARROGANT - NOW THE RINGGIT IS REALLY WAITING TO BUST PAST RM5 TO US$1 - WITH RUNAWAY PRICES, COST OF LIVING KNOCKING DOWN THE DOORS
posted by politics now! on February 19, 2024
IT'S TOO LATE - MALAYSIA ABOUT TO BE BEATEN BLUE-BLACK BY A MADANI-MADE HURRICANE - RAISING OPR BY 0.25% A JOKE NOW AS DIFFERENTIAL WITH U.S. RATES ALREADY TOO BIG - WHEN ANWAR REGIME COULD HAVE KEPT APACE, THEY WERE ARROGANT - NOW THE RINGGIT IS REALLY WAITING TO BUST PAST RM5 TO US$1 - WITH RUNAWAY PRICES, COST OF LIVING KNOCKING DOWN THE DOORS
RM4.78 TO THE USD - JUST LET IT GO
The Ringgit has hit RM4.78 against the US Dollar today.
Here is the real danger folks, Some morons who do not know anything about business or finance are making suggestions that Bank Negara's OPR be increased again from its present 3%.
And why do they want to do this? Because they are beginning to look stupid. They dont know how to manage the economy. So to save their faces from embarrasment they are suggesting that the OPR be increased which will help to strengthen the Ringgit. (Yes I read that really stupid "OPR theory" that is going around - written in Malay).
These fellows are real morons. But the OPR was already raised by 0.25%. And it has not helped the Ringgit. The Ringgit is still dropping even AFTER the OPR was increased. How do you explain that? What makes you think that raising the OPR again will strengthen the Ringgit?
This is NOT the US economy or the Japanese economy. In the US and Japan there are no rice import monopolies, GLCs and other moronic players. The Japanese Yen has also fallen against the US Dollar but Japanese are now the world's largest investors in US Dollar Bonds. Japanese hold over US$1.1 TRILLION worth of US Treasuries. And the Japanese are earning 5% interest on their US T-Bills. No way are the Japanese in a weak position.
So morons, please do not compare Japan and the USA with Malaysia. What is wrong with you? Kampong Pisang and Wall Street jauh lah.
If the OPR goes up another 0.25% I can imagine the monthly bank instalments may increase by another 13%. This is what happened to our loan repayment the last time the OPR was increased. The monthly payment jumped by 13%. Meaning you are willing to sacrifice the economy just to avoid looking stupid. But you are already stupid, stupid. How are you going to change that?
Playing with this, playing with that, adjusting this, adjusting that is not going to fix the economy or the Ringgit. The economy needs real structural change which your otak Kampong Pisang is not capable of figuring out.
Just go and deliver some food on your motobike ok.
-https://syedsoutsidethebox.blogspot.com/
POLITICS NOW!
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