Wednesday, August 19, 2015

Oh no, where's our Ringgit?!



With updates 19/8 3.30pm

19/8 DAMNED! The Ringgit is NOT even on this list of "troubled currencies" at all! Our naysayers, of course, will find it very hard to accept the exclusion of the Ringgit in Morgan Stanley's latest Troubled Ten Currencies. But Morgan Stanley was right about their Fragile Five currencies before!
The fact is, WE ARE LOOKING OK.
The key to our being OK is the current account deficit and our current account deficit has been well managed by the government over these few years and has been consistently coming down. 

Morgan Stanley's Fragile Five Swells to Troubled 10 in Selloff


FORGET the “Fragile Five.” These days, strategists at Morgan Stanley are worried about what could be called the “Troubled Ten.”
That’s how many nations they say are particularly at risk since China devalued the yuan. While the analysts haven’t used the term themselves, it’s as good a description as any for the currencies -- from the Brazilian real to Peru’s sol and South Korea’s won -- which have trading ties making them susceptible to a slowdown in the world’s second-biggest economy.
“It’s all about vulnerability,” said Hans Redeker, the London-based global head of foreign-exchange strategy at Morgan Stanley. “Major victims of the policy change this time are currencies of countries with high export exposure and export competitiveness with China.”
Morgan Stanley was right about the Fragile Five. Those currencies include four of the developing world’s eight worst performers since the phrase was coined in 2013. The real, together with Turkey’s lira, South Africa’s rand, the Indian rupee and Indonesian rupiah, have suffered as rising global interest rates make it more difficult for the countries to finance their current-account deficits.

No Growth

For Redeker, the biggest challenge now is a lack of global growth. While central banks in Japan, Europe and the U.S. have rolled out record stimulus, the world’s economy will expand at the slowest pace since 2009 this year, according to International Monetary Fund forecasts.
That “lukewarm” recovery means China won’t be able to rely on exports to drive expansion, said the strategist, whose firm was the second-highest ranked forecaster of the dollar versus the yuan, according to data compiled by Bloomberg for the four quarters ended June 30. In turn, the slower growth will also put China’s trading partners in the crosshairs.
There’s some overlap between the Fragile Five and the new at-risk list, with the rand and real to be found in both. Also vulnerable to China’s slowdown are the Thai baht, the Singapore and Taiwan dollars, the Chilean and Colombian pesos, Russia’s ruble and the won and the sol, according to Redeker.
China is the top export destination for most of the countries on the troubled 10 list, data compiled by Bloomberg show. The nation accounted for 37 percent of South Africa’s exports and 30 percent of South Korea’s in 2014.
Investors were jolted last week as China implemented the biggest depreciation of the yuan since 1994, raising concern that authorities plan to use a lower exchange rate to shore up the weakest growth in more two decades.

Global Repercussions

The move rippled through global markets, weakening the currencies of the Asian countries that compete with China for exports and sending developing-nation stocks into a bear market. A Bloomberg index tracking major emerging-market currencies, already under pressure from slowing growth and a slump in commodity prices, fell 0.9 percent last week to a record low.
“The move by China has introduced further concerns on foreign-exchange valuations in emerging markets,” said Chris Chapman, a London-based fixed-income trader at Manulife Asset Management, which oversees $302 billion. “We have reduced our EM positions over time as the risk-reward profiles have changed, and will continue to monitor.”
Even with the yuan roiling markets, investors still see the Federal Reserve sticking to its plan to raise interest rates for the first time in nine years, threatening to lure capital away from emerging markets. Futures contracts show traders see a 75 percent chance the U.S. central bank will move by year-end.
It will take a sizable fiscal package to boost China’s economy and reverse the selloff in emerging markets, according to Redeker -- and it’s not clear that will be forthcoming.
“The biggest concern is that we are not going to turn the corner and the economic performance in China will continue to disappoint,” he said. “Investors will watch China data closely and trade the yuan accordingly.” - Bloomberg Business, 17 Aug

-----------------------------xxx----------------------------

Updated: 
"And to strengthen this allegation there are even efforts to attack the Ringgit to ‘prove’ that the world has totally lost confidence in Malaysia. The picture being presented is that a lower Ringgit means that Malaysia is headed for doom. "

32 comments:

Anonymous said...

Orang tak ada anak belajar di luar negeri memang tak perlu bimbang teantan kejatuhan nilai RM Yang dok guna duit sendiri tnap bantaun kerajaan yang tu yang bimbang amat sangat. Takpa lah. Kita dengaq cakap Mat Masaln dan Nazri Aziz senang kita hanatq duit kat Ostolia ka, Engeland ka US of A ke. Itu masalah kita bukan hal yang harus dipedulikan oleh kerajaan. Rakyat di belakangkan Datuk.

Anonymous said...


OH NO!!!!!!!!!!

That must be conclusive proof that 11 billion in FDI didn't just run away...

Oh no......it did.

Nothing to sabotage the economy like the "leader" (ha ha) getting US$700 million in his personal account, and not being able to account for how it was spent, after DENYING even getting it in a personal account.

Good stuff.

Investors love that.

As poopstains go, that is about 1,000 times more damaging than PetroSaudi, I think?

Lawrence Tan said...

The simplest way that an ostrich can do to avoid seeing his enemy is to bury its head into the sand. This is exactly what you are doing by publishing this article.
The ringgit was 3.2 to a dollar a year ago. It dropped to 3.6 in Jan, and is now 4.1. It has deprecated for more than 25% compared to a year ago.
Continue to pretend there's nothing serious, and feel proud because they are many other currencies which are worse off than the ringgit.

Anonymous said...

The ringgit could well be at the 11th spot. If this is true, have re-read the article and it's terrifying.

Anonymous said...

Cherry picking the news is the best thing to do :)

Anonymous said...

What are Singapore's forex reserves compared to Malaysia's?

Who is in a better position to cope with a run on their currency - the Monetary Authority of Singapore or Bank Negara?

Malaysians aren't stupid, Bru.

Bru said...

Lawrence,
Like I said in my posting, the naysayers aren't going to be too excited. You have proven me right, thank you. i just need to remind you that this is Morgan Stanley saying it. There have been times when I disagree with them, so I can sympathise with you here, read assured. But the fact remains that we aren't as bad as the naysayers try to portray. People like you lack the self-esteem but that doesn't mean the rest of us should stop being confident in ourselves and our economy's ability to once again weather the storm.

Bru said...

Anon 1255pm,

I have friends who have kids studying abroad and they are affected by the currency rate changes. That's something some of them had expected but nobody thought the US dollar would strengthen by this much. I hope the government bails out people like you, Anon. As for me, my children are studying locally. Of course, I am affected too by the "smaller" ringgit but not as much as you or friends of mine who sent their children to foreign universities.

Anonymous said...

Uncle Rocky,

Keep on posting stuff like this. I'm sure the naysayers, prophets of doom, trouble-makers and all those pessimistic people who like to see this country turn upside down, will find it hard as they cannot spin it around. Facts are the most stubborn elements in the universe.

Love,
Pwincess.

Anonymous said...


"People like you lack the self-esteem but that doesn't mean the rest of us should stop being confident in ourselves and our economy's ability to once again weather the storm."

Yes, Latuk.

He also lacks a PR retainer from the govt, so he may actually not have a motive, unlike you. Betul tak?

It's like saying that the ministers who get slipped 2 mil, 1 mil or even 50K (ohhh, sorry, these must be "donations"?) all support Jibby Boy because they think he's competent.

Errrrrr....

...no.

Anonymous said...

Easy to cut and paste bro. Nanti orang Vietnam pun dah tak nak datang kerja kat sini. Early last at 3.2 if they get minimum wage RM900 so they can have USD280 but today dah jadi USD219 ,depa dah miskin USD61 every month.

Maybe MYR not in the list tapi kita makin miskin, kilang kilang akan reduce CAPEX ,cost importing machineries dah naik.

Anonymous said...


Interesting factoid:

Our first-ever nett outflow of FDI happened in 2009.

Who took over power in 2009?

It's a curse on the nation, I swear.

Caspar Milquetoast said...

"Escaping Najib's Malaysia, investors flee currency, stock market" (http://btd.sg/1MBYGh5).

"Malaysia riskier than Mexico, has UBS warning of worse to come" (http://btd.sg/1MC82co).

Of course, no one could accuse Bloomberg of being negative about Malaysia and the ringgit.

Also Google this Reuters report "Petrobras may need to pay US$1.6b in penalties".

Anonymous said...

The Chibais must be having a hard time to explain Why Sing dollar? Why nor Ringgits?

Had it been Ringgit in the list... its virall right now


Penyu

Anonymous said...


Itu lah masalahnya kalau kita samakan kejatuhan ekonomi dengna Najib bersalah mencuri atau tidak. Tak ada kaitan. Orang kata Najib mencuri sebab dia tak bagi orang menyiasat dia mencuri atau tidak.

Dalam hal ekonomi pula, susah kita nak kata Najib pandai jaga ekonomi. Sebab dia sendiri tak boleh terangkan apa dia nak buat. Macam mana kita nak kata dia proaktif dan cekap.

Filipina adalah jagoan ekonomi Asia Tenggara sekarang. Dah kembali pulih selepas dijahanamkan oleh Marcos dalam 20 tahun. Najib baru 6 tahun. Bagi 10 tahun lagi, hancur la kot

People Against Opposition said...

http://peopleagainstopposition.blogspot.com/2015/08/pap-jalan-tengah-kepada-pilihan-politik.html

Anonymous said...

Hahaha anak aku belajaq dekat uia, tak sampai rm3000 setahun, siap accomodation lagi, and cekgu bertaraf dunia....ada jugak saya hantaq kat mmu, kira mahal lah, but rm40k whole 4 years degree!.....i dont give beep beep about usd up or down, my life no change, happy as a bee...thank you malaysia! Aku dulu belajaq overseas,takde lah advantage sgt, sama jah....kena ludah dgn omputeh sbb depa tak suka beep beep asians ada lah!

Foreigners berlari lari nak belajaq kat sini, hang punya pasai lah nak hantaq anak kat londin....so jgn komplen lah! Tak mampu jgn hantaq!

Anonymous said...


Also from Bloomberg, predicting the future is a fool's business. No one could have predicted last year where we are now. Just hope the economy (continues to) prospers and the economic pie keeps growing to lift all boats.



Malaysia Riskier Than Mexico Has UBS Warning of Worse to Come
David Yong
August 19, 2015 — 4:12 AM BST


Malaysia is paying the price for weak foreign currency holdings and messy politics as the cost to protect its debt soars to near a four-year high. UBS Group AG predicts even more pain ahead.

The spread on the nation’s credit-default swaps widened 74 basis points in 2015 to 180 this week, a level not seen since October 2011. It’s the worst performing in Asia and almost 40 basis points more than similar-rated oil-producer Mexico, which the Swiss bank says best illustrates the malaise for Malaysia.

“The moves in CDS are telling us that the market is increasingly nervous about the central bank’s ability to manage the foreign-exchange selloff in light of its relatively light reserves position,” said Manik Narain, a London-based strategist at UBS. “Malaysia’s situation may now be more precarious.”

Bank Negara Malaysia’s foreign-exchange reserves slipped below $100 billion last month for the first time since 2010. They look “increasingly meagre” by emerging-market standards, said Narain, and compare with foreigners’ 206.8 billion ringgit ($50.6 billion) holdings of local-currency debt in July, the lowest in three years.

The ringgit this week traded near the weakest level since 1998 as Prime Minister Najib Razak comes under the spotlight over reports of an almost $700 million donation into his bank account that was initially linked to debt-ridden state investment fund 1Malaysia Development Bhd.

The central bank may have to raise interest rates because of a limited ability to defend the currency amid falling reserves, Narain said. The ringgit was trading at 4.09 per dollar at 10:18 a.m. in Kuala Lumpur and UBS expects the currency to fall to 4.20 by year-end.

trivikram jenze said...

I agree totally with Rocky. Our ringgit will recover and be stabil again to the US dollar soon before christmas if you ask me.

Anonymous said...

Dear Datuk,

While some bloggers are blaming the decline of the ringgit to 1MDB's reckless debt situation, your point is taken.

However, let's not deflect the fact that the 1MDB investigations are stuttering to a grinding halt and so far nothing has been satisfactorily explained.

For example:

The return of investment in the Petrosaudi JV which were first cash, "units" and then "fund units".

"In September 2012, 1MDB sold its shares in PetroSaudi Oil Services Limited for USD2.318 billion and received fund units in a Cayman registered fund. The Cayman registered fund is managed by Bridge Partners, a Hong Kong-based fund manager. These fund units were owned by 1MDB via its 100% subsidiary, Brazen Sky, and held through BSI Bank Singapore as custodian." - 1MDB 16 June 2015

Till today there is no breakdown and precise description of these mysterious "fund units"

Anonymous said...

Dear Datuk,

While some bloggers are blaming the decline of the ringgit to 1MDB's reckless debt situation, your point is taken.

However, let's not deflect the fact that the 1MDB investigations are stuttering to a grinding halt and so far nothing has been satisfactorily explained.

For example:

The return of investment in the Petrosaudi JV which were first cash, "units" and then "fund units".

"In September 2012, 1MDB sold its shares in PetroSaudi Oil Services Limited for USD2.318 billion and received fund units in a Cayman registered fund. The Cayman registered fund is managed by Bridge Partners, a Hong Kong-based fund manager. These fund units were owned by 1MDB via its 100% subsidiary, Brazen Sky, and held through BSI Bank Singapore as custodian." - 1MDB 16 June 2015

Till today there is no breakdown and precise description of these mysterious "fund units"

charleskiwi said...

Looks like you are in the wrong profession, may be Najib should have you appointed to his department as one of the ministers !

Ahbok Bakari said...

Bru it looks like this CIMB fellr Nazir Razak instead of sabotaging the economy must take lessons from you:


We can agree with Dato’ Nazir Razak, Malaysia will face tough times ahead. The ordinary man in street does not need high-flown economics to know this because he is living it everyday. Malaysians are now frustrated with the Prime Minister’s management of our economy and have no confidence in his political leadership.

https://dinmerican.wordpress.com/2015/08/20/tough-times-ahead-says-cimb-group-chairman-nazir-razak/

Anonymous said...

"Oh no, where's rocky's integrity?!"

Anonymous said...

You wrote, "... But the fact remains that we aren't as bad as the naysayers try to portray...

So, Latuk Locky... just exactly how bad do you think your naysayers are trying to portray the depreciation of the ringgit???

Two wrongs will never equal one right, will it???

Duh!!!

Latuk Locky, ahhhh... stop trying to justify a wrong... you are not good at it... & you never were any good at spinning... you are too naive...

So, please stop... you will only succeed in making people despise you more.

Wake up, dude... havent you noticed that a vast majority of your commenters are against your spin of the real situation???

Moral of the story: the negative aspects of your recent postings is not worth the money they paid you.

Anonymous said...

The fact remains that the RINGGIT HAS DEPRECIATED AGAINST THE USD!

Anonymous said...

Trying to picture that Singapore Dollar is now in more "trouble" than our Malaysian Ringgit???

Oooh Singaporeans, quick2 dump your dollors now for our runggits.....just 2 billion ringguts will do.

Hehehe, only monkeys in the zoo will buy your story.

Lawrence Tan said...

The fact remains that there is hardly any commenter who concurs or supports your arguments. I have seen one or two, but they seem to read sarcastically, rather than sincerely agreeing with you. My heartfelt advice, repent and revert before it is too late. Money cannot buy anything. I wonder if you still have "friends", I mean genuine friends whom you can confide to? You must have lost many of them since you sold off your soul.

Anonymous said...

Good one dato..tq

Shalelalela

Anonymous said...


"The fact remains that there is hardly any commenter who concurs or supports your arguments. I have seen one or two, but they seem to read sarcastically, rather than sincerely agreeing with you. My heartfelt advice, repent and revert before it is too late. Money cannot buy anything. I wonder if you still have "friends", I mean genuine friends whom you can confide to? You must have lost many of them since you sold off your soul."

Soul or houl?

Anonymous said...

Well done Rocky...you are being rational but those losers are being emotional...emotional people could not lead the country....Najib is the right person right now...if AI...it will be back to 4.8 per USD...

Unknown said...

http://www.bloomberg.com/news/articles/2015-08-20/10-currencies-that-may-follow-tenge-in-tumble-triggered-by-china