tag:blogger.com,1999:blog-6297413898275266606.post1859650897134103311..comments2024-03-27T18:15:59.096+08:00Comments on Economics Malaysia: Ringgit Under Pressure? Markets Are Irrationalhishamhhttp://www.blogger.com/profile/06265308095732759923noreply@blogger.comBlogger17125tag:blogger.com,1999:blog-6297413898275266606.post-14399460916134042462014-11-28T10:50:32.326+08:002014-11-28T10:50:32.326+08:00So true, Hisham. Despite Russia's reliance on ...So true, Hisham. Despite Russia's reliance on oil exports, the decline in rouble has been in tandem with the decline in oil price, so their budget deficit has been manageable in rouble temrs (read the article in today's The Edge). Only thing they need to do is to limit their imports (which they have been doing due to the sanctions).roger dodgerhttp://roger.dodger.comnoreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-86289006956096584662014-11-26T09:47:21.914+08:002014-11-26T09:47:21.914+08:00@Value Investor,
Most of the research houses sugg...@Value Investor,<br /><br />Most of the research houses suggest that the impact will be negative, but not unmanageable. The revenue contribution is far bigger than the subsidy outlay (which also includes BR1M). That RM37 billion figure is the total subsidy bill, and the portion for fuel is actually far smaller.hishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-78722388369342959222014-11-26T09:45:06.144+08:002014-11-26T09:45:06.144+08:00@whither the lion
Malaysia's current account ...@whither the lion<br /><br />Malaysia's current account surplus is declining due to higher imports of capital goods, mostly from the ETP.<br /><br />Deficits aren't a sign of weakening or strengthening of an economy; rather they're indicative of imbalances.hishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-4008881067512467122014-11-25T10:22:26.769+08:002014-11-25T10:22:26.769+08:00Hisham,
Based on the latest available info, what ...Hisham,<br /><br />Based on the latest available info, what will be the impact of the drop of the crude oil prices to USD75-80 on the Malaysian Govt's Budget for 2015. It was reported that RM37 billion has been budgeted for fuel subsidy. Will the savings from the cut of subsidies for the RON 95 and diesel enough to compensate for the lower tax revenue from petroleum products due to the lower Value Investorhttps://www.blogger.com/profile/07604438410220071922noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-5798377413426272202014-11-25T07:15:40.804+08:002014-11-25T07:15:40.804+08:00Perhaps what investors are focused on are the rela...Perhaps what investors are focused on are the relative growth prospects of the two countries. A declining current account surplus suggests that Malaysia's growth is declining, especially if it's due to a decline in exports. The US is not growing like gangbusters, but growth is expected to at least increase. Switching out of Malaysian assets into safer US assets seems reasonable.<br /><br whither the lionhttps://www.blogger.com/profile/09491425756569828426noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-80748617933762007502014-11-25T00:21:01.237+08:002014-11-25T00:21:01.237+08:00@anon 2.41
Just to be clear, I'm not complain...@anon 2.41<br /><br />Just to be clear, I'm not complaining about the drop in the Ringgit, I'm complaining about the nonsensical rationalisations people are coming up with.hishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-35043914369637219372014-11-25T00:18:06.889+08:002014-11-25T00:18:06.889+08:00@dukuhead,
You mean like Singapore? Oh wait... J/...@dukuhead,<br /><br />You mean like Singapore? Oh wait... J/K :D<br /><br />Actually, a lot of currencies have been hit, not just the MYR. Virtually no one has been spared. That's why explanations based on local circumstances sound so silly.hishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-32321876051633194422014-11-25T00:14:09.461+08:002014-11-25T00:14:09.461+08:00@anon 4.17
Only those who allow their currencies ...@anon 4.17<br /><br />Only those who allow their currencies to remain tied to the USD, like most Middle Eastern producers. Malaysia's floating rate partially insulates us from changes in commodity prices - not fully, mind, but better than nothing.hishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-53164353572572712602014-11-25T00:12:15.716+08:002014-11-25T00:12:15.716+08:00@rodger dodger
The worst performing currency this...@rodger dodger<br /><br />The worst performing currency this year is the SGD, even worse than the Ringgit. And Singapore has twin surpluses. Go figure, because I can't :Dhishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-83728048839827842002014-11-25T00:10:19.101+08:002014-11-25T00:10:19.101+08:00@bee farseer
See my answer to Latuk above. The sa...@bee farseer<br /><br />See my answer to Latuk above. The same statistical test applies.hishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-81677024772504410012014-11-25T00:09:38.063+08:002014-11-25T00:09:38.063+08:00@Latuk
Of course the USD is a reserve currency. B...@Latuk<br /><br />Of course the USD is a reserve currency. But you're committing a fallacy here. The Dollar has been a reserve currency for nearly one hundred years. Given that it was a reserve currency six months ago, and a reserve currency today, that's not a significant enough explanation for the changes in capital flows between then and now.<br /><br />And Malaysia can print money toohishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-86405110310566747122014-11-24T19:58:43.828+08:002014-11-24T19:58:43.828+08:00Hisham I agree with u that the markets can be irra...Hisham I agree with u that the markets can be irrational but I'd hazard a guess that foreign investors are more spooked by the lack of strong political stewardship ie the real possibility of the incumbent govt losing in the next next general elections and the uncertainty that may follow than by the govt's recent economic reforms which though praiseworthy have failed to address the seriousdukuheadhttps://www.blogger.com/profile/14663352492665996494noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-87690556668713604062014-11-24T16:17:21.400+08:002014-11-24T16:17:21.400+08:00I would argue that it's not so much "twin...I would argue that it's not so much "twin deficits" per se, but whether a country is deemed to be too big to fail.<br /><br />I am not overly worried about Malaysia's budget deficit, nor am I thinking that the trade stats will go into deficit any time soon.<br /><br />Commodity-based economies should worry as Chinese demand softens. Western Australia is already facing this with Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-20338652226693658892014-11-24T15:32:22.624+08:002014-11-24T15:32:22.624+08:00Let's have some more facts. Are there any othe...Let's have some more facts. Are there any other currencies with the twin deficits that everyone's talking about? How has their currency performed?roger dodgerhttp://rodger.dodger.comnoreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-27975800704661041102014-11-24T14:41:54.025+08:002014-11-24T14:41:54.025+08:00Where's the question?
Or did you miss out a q...Where's the question?<br /><br />Or did you miss out a question mark?<br /><br />Ok, levity aside, you do make a salient point.<br /><br />That is, in a world dominated by the USD, EUR, JPY and, sooner or later, the RMB, the rest of the world's currencies have to scramble to keep themselves relevant in the eyes of investors and "the markets".<br /><br />It's an unfair world,Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-66496803392148365582014-11-24T13:38:39.774+08:002014-11-24T13:38:39.774+08:00Well, Hisham....when you are a country with the pr...Well, Hisham....when you are a country with the premier "reserve currency" and are the biggest player in financial markets, you are allowed to get away with stuff.<br /><br />Put it this way, would the world's rich and famous (including those in Asean) prefer to hold a substantial portion of their wealth in Ringgit or US Dollars, or in assets denominated in those currencies.<br /><bee farseernoreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-44551791374478075772014-11-24T13:34:40.387+08:002014-11-24T13:34:40.387+08:00"Um, how does that work, exactly?"
Beca..."Um, how does that work, exactly?"<br /><br />Because US dollar is the reserve currency. I believe they can print as much as they want and won't suffer any hyper inflation or a crash in the dollar. Reason being that if US dollar goes to the toilet, so does the entire world, even more so for the ringgit. Which I don't think it will happen.<br /><br />Put it that way, if you can Latukhttp://www.geckoandfly.comnoreply@blogger.com