Tuesday, March 3, 2015

BNM Watch: Wishin’ I Was Lucky

The Monetary Policy Committee will be meeting this Thursday and the consensus opinion is that there won’t be any change. I don’t think so either, but pressure will be mounting.

BNM won’t be the only central bank deciding on monetary policy this week. Also on the clock are Australia, Canada, Brazil, Poland, Albania, the UK and the ECB. I expect no change from the latter two  with the ECB having already pre-announced the start of Euro-area QE beginning this month and the BOE likely to stay the course. Brazil was the odd man out, with a 50bp hike in January.

Monday, March 2, 2015

Data For Free

Big data is gaining traction. The IMF is offering all its databases free of charge from the beginning of this year:

IMF Offers Free Access to Its Online Economic Data

From the start of 2015, the IMF has made its online economic data available to everyone free of charge. Users have access to a wealth of

macroeconomic data covering all economic sectors of a large part of the IMF’s member countries.

This includes the International Financial Statistics (IFS), Balance of Payment Statistics (BOP/IIP), Government Finance Statistics (GFS), and Direction of Trade Statistics (DOTS) databases. These were all previously only available via subscription.

If you’re interested in Singapore, Singstat has also put its data online (warning: pdf link):

Free Access to More Data on the SingStat Website from 1 March 2015

Data users can look forward to free access to some 12,000 statistical data series on the SingStat website. The data series span across multiple topics within two broad themes, namely population and economy.

So what’s the big deal? It’s not so much that the data is free and online, but that its also readily accessible via visualisation and data downloads of historical time series.

DOS, here’s your next big project.

Wednesday, February 25, 2015

Queuing For Petrol

If you’re the type to queue up for petrol before prices are hiked, make a note to fill up this Saturday:

01_brent

Since hitting bottom in the second week of January, Brent crude oil has rebounded to around the USD60-USD55 per barrel range (about 20% higher), compared to the USD47.80 average for January.

While Malaysia’s APM pricing is based on MOPS, not Brent, there’s an obvious correlation involved (MOPS includes refinery costs). February’s average Brent prices are pretty close to December’s (the difference is just USD1-USD2 per barrel), so we’re likely to see petrol and diesel prices close to those prevailing in January – RM1.91 for RON95 and RM1.93 for Diesel.

I’m expecting CPI inflation to now hit 0.3% in February, before rising to 1.1%-1.2% in March.

January 2015 Currency Update

I’ve left this off the blog for a very long time, but with so much interest know on the exchange rate, it’s time to revive this particular zombie.

We all know the Ringgit has depreciated significantly against the US dollar in the past half year:

01_usd

One Ringgit now buys US 29 cents, compared to 33 cents a year ago.

Monday, February 23, 2015

Travel Advice

More expensive holidays overseas? Say it ain’t so (excerpt):

Little respite for the ringgit

PETALING JAYA: Cheap airfare is a boon for holidaymakers going overseas, but Malaysians can’t help but feel a little short-changed after a trip to money changers.

Take the Thai baht, which had advanced 13.2% over the past six months. At 8.93 last week, the baht is at its most expensive against the ringgit since 2007.

Notes On Oil Part II

These are some short notes taken from a presentation I gave last week:

Supply side issues

  1. Global oversupply is only likely to ease by the end of this year. Peak oversupply will be in 2Q2015;
  2. Despite the various contributions of Iraq, Libya and other countries, about 60% of the oversupply is coming from the US;
  3. Just four countries commercially produce shale oil, and the vast majority of it is from the US;
  4. But this production is expected to peak by 2020;
  5. Bottom line: global oversupply is really a US story, and it will persist for the next half decade.

January 2015 Consumer Prices

I’m back from my CNY break, and I hope everyone is back home safe and sound at this beginning of the Year of the Goat.

Last week’s inflation report was a huge surprise, not so much because inflation was down, but the magnitude far exceeded expectations (log annual and monthly changes; 2000=100):

01_indexes

Monday, February 16, 2015

4Q2014 National Accounts: Smokin’ Hot

From last week’s 4Q2014 GDP report, it looks like the IPI was more than just a harbinger, it was spot on (log annual and quarterly SAAR changes; 2005=100):

01_gdp

Thursday, February 12, 2015

Dec 2014 Industrial Production: Smokin’

Back in 2011, I remember the budget coming out and the complete disbelief at the government’s 2012 growth forecast. From economists to the man on the street, nobody thought growth would be anywhere near 5%, much less exceed it (this was right after the Greek bailout). Hell, I was wrong too – I thought 5% was achievable, but a little on the optimistic side. In the end, the economy hit 5.6% GDP growth for 2012, almost right in the middle of the government’s initial forecast.

Deja Vu.

Thursday, February 5, 2015

To Peg Or Not To Peg Part II: FX Intervention Under A Floating Rate Regime

FX intervention is de rigueur under a fixed exchange rate regime – it’s a basic requirement to maintain exchange rate parity.

But there’s also, for various reasons, FX intervention in floating rate regimes. Leaving aside soft pegs, crawling pegs, snakes and the like, how effective is FX intervention under a largely free float?

I don’t think it’s very effective at all.

Monday, February 2, 2015

Currency Manipulation and Economic Sabotage

This started circulating on blogs and social media sometime late last week:

How Tong Kooi Ong is attempting to break Bank Negara and crash the RM

An owner of a prominent news media empire is casting undue influence on the financial and political state of Malaysia for his own personal monetary gain.

Sources within Bank Negara Malaysia (BNM) revealed that Tong Kooi Ong, the owner of the Edge Group and The Malaysian Insider has taken a USD1.4 billion short position on the Ringgit through a proxy. The first transaction took place in August 2014 and subsequent short positions have been taken leading up to January 2015….

Thursday, January 29, 2015

To Peg Or Not To Peg

This question has been coming out a bit lately, so let me try heading off any more of this nonsense before it gets any more steam.

With the Ringgit declining, some of the those with long enough memories remember what happened in 1997-1998. In September 1998, Malaysia imposed “drastic measures” – we fixed the value of the Ringgit at RM3.80 to the USD and instituted capital controls. That halted the downward spiral of the Ringgit, and allowed BNM to regain control of domestic monetary policy. So people wonder, why not peg again?

Here’s the problem with that narrative.