Tuesday, 8 September 2015

A Good Description On What Happens To RM / MYR Nowadays By The Drummer


To Know Your Currency Is Also To Understand How It Works.

I took a leave for holiday from my daily routine job after attending some occasioned back in my hometown in Malaysia last few day ago started from yesterday.Kinda tired a bit.. At first,i thought to return to Indonesia where i spent most of my time working on my new development project that will took years to be finish but then i decided to spend my time here with my mom at her hometown in Busan,South Korea.Maybe for a week or few days to come.. shouldn't feeling weird about it because my mom actually a Malaysian korean ancestry and i'm actually a mix races.

As usual when i took a holiday,it doesn't mean a fully rest day as i can't survive my life by doing nothing.If you think It is weird for you and wonder why,it's also weird for me as well,so no answer for that.. Still stick with my paperwork wherever i go then took out my gadget and keep scrolling on e-mails and facebook. There,i got plenty of questions about the dropping ringgit currency from friends who like to know my opinion.. 

How big was the drop and when did it start?

The ringgit started falling in late 2014. 

On 11 August 2015, China devalued its currency which caused other Asian currencies to suffer and pushed the ringgit down further, as the devaluation of the yuan strengthened the dollar.

In June 2015, Bloomberg reported that the world is facing its longest oil glut in three decades as supply continues to outpace demand.

Honestly it's kinda question that i like to avoided and a bit annoyed,especially too much affecting the political interest but i will answer it in a very "simple reason" and please don't bother to think from political sentiment for any reason that i give here as everyone has their own opinion on the value of the ringgit.More often than not, the opinion would depend on one’s political leaning. The truth is most of the arguments presented thus far are actually quite meaningless. They are full of political rhetoric but short of economic rationale and logic.

So,How low has the ringgit fallen?Before closing on 3 December 2014, the ringgit dropped to as far as 3.4455 to the US dollar – the weakest it had been since February 2010.

In the first quarter of 2015, the ringgit’s value continued to weaken. On 11 March 2015, the ringgit traded at 3.7105 to the dollar. The Malaysian Insider reported that there was the perception of a “looming crisis”, with the value of the ringgit being close to 1997 levels.

On 8 June 2015, the ringgit dropped to 3.7743, the lowest since January 2006. On 9 June 2015, it fell to its lowest value against the Singapore dollar in 30 years, trading at RM2.77 to the Singapore dollar.

On 6 July 2015, it was reported that the ringgit had dropped to its lowest level in 16 years, falling to 3.81 to the US dollar. When the ringgit was pegged to the dollar in the aftermath of the Asian Financial Crisis of 1997, it was set at 3.8.

On 12 August, the ringgit fell to RM4.0025 against the dollar, the lowest in 17 years.

On 1 December 2014, the ringgit had its largest two-day depreciation since the 1997-98 Asian financial crisis, falling 2.4% to 3.4300 to the US dollar at closing, from 3.3465 per US dollar on Thursday 27 November at closing.

On 12 June 2015, it was reported that the ringgit had dropped for four consecutive weeks in the year’s longest losing stretch so far. The ringgit has become Asia’s worst performing currency.

And today, Ringgit value converts to usdollar at 4.31.. 

There are a combination of several factors caused the drop in ringgit's value. Firstly, the lower value of oil. As oil is one of Malaysia’s main exports, the declining price of Brent crude oil of 38% from its June 2014 high is affecting the currency.

The falling value of the ringgit in June 2015 has also been attributed to the prospect of the US increasing its interest rates.

Oil prices have fallen because supply has been exceeding demand, mostly due to high production of oil in the US. The price of Brent crude oil has now fallen to a four-year low. OPEC (The Organization of the Petroleum Exporting Countries), has so far declined to cut back on its production of oil too.

The Bloomberg report states that the government is “already under fiscal pressure” and the central bank may be willing to accept the ringgit weakness to boost other exports and offset the drop in oil prices which will undoubtedly impact the economy.

Channel News Asia reported that "lower oil prices will impact Malaysia’s trade and fiscal balance negatively."In June 2015, the credit ratings agency Moody’s continued to give Malaysia a positive outlook, but the Fitch credit ratings agency gave Malaysia a negative outlook. Fitch threatened to downgrade Malaysia’s credit rating.However, on 1 July 2015, Fitch upgraded Malaysia’s credit rating to “stable”.

In December 2014, Credit Suisse Group AG lowered its three-month ringgit forecast from 3.38 per dollar to 3.49 per dollar. Reuters reported that the ringgit would continue to fall until oil prices stabilise.

In December 2014, Channel News Asia report reported that oil prices will only “stabilise by the middle of next year and may go up toward US$80-85 into late 2015”, so they foresaw a rebound for the ringgit late into 2015.

In 2015, the ringgit’s value has weakened month on month, apart from some slight relief in late April when the currency strengthened. However, since late May, the ringgit has again seen a sharp decline in value.

As of June 2015, central bank governor Dr Zeti Aktar Aziz believed the weakening currency to be a short term problem. On 19 June 2015, the ringgit pulled back against the US dollar with an uptrend, its value rising to 3.7050/7090 per dollar.

However, in July 2015, the Financial Times reported that some banks have predicted the ringgit will sink to as low as 3.88 to the dollar by the end of 2015. This prediction has now become reality, as the ringgit has fallen to over 4.00 to the dollar.

And this part below i will again remind that this is not a political point.. its about rumors and speculations that i against anyone to manipulating the story if you like to see a stable and strong in ringgit if you understand what i mean.

As questions over Malaysia’s 1MDB debts have gained global attention, this has also affected confidence in the ringgit. Former Finance Minister Tun Daim Zainuddin was one of those who blamed the 1MDB financial debacle and nowadays its happened to be more annoyed when there were said to be a conspiracy to tarnishing and to topple the government using 1mdb issues.

However, those defending 1MDB also blamed the former Prime Minister Tun Dr. Mahathir Mohamad’s criticism of the government for the weakening currency.

While In July 2015, media reports that Prime Minister Najib Razak’s personal accounts were involved in the transfer of USD700 million of 1MDB money have caused further weakening of confidence in the currency.

Now,rationale in this weaken ringgit is because of external and internal factors. I just given a reason why ringgit is at this point.Any plan and solutions in ringgit will need to refer to the authorised. By the way,the external factors is a global issue's while the internal factors its all depends to we all on how we behaved ourself. I hate politics,it means for power struggles while we actually at our own and our resposibility is to strengthen up the stability for prosperity..

The Drummer.

Published with permission.

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