Skandal 1MDB: Ringgit Malaysia jatuh 3 bulan berturut-turut

amansihat · Post time 1-8-2015 07:49 PM

More Evidence Of China Slowing Permeating Asia
By VW Staff of ValueWalk
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amansihat · Post time 1-8-2015 08:00 PM

Malaysian ringgit could plunge to 1998 levels if 1MDB debt unpaid: Second Finance Minister
Malaysian ringgit could plunge to 1998 levels if 1MDB debt unpaid: Second Finance Minister
Second finance minister Ahmad Husni Hanadzlah warned that if the 1MDB’s debt issue is not resolved, a negative chain of events may impact Malaysia’s economy. Photo: Malay Mail Online
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PUBLISHED: 9:17 AM, JUNE 4, 2015(PAGE 1 OF 2) - NEXT PAGE | SINGLE PAGE
KUALA LUMPUR — Malaysia must resolve 1Malaysia Development’s (1MDB) debt issue or risk a negative chain of events, including a possible downgrade to the country’s credit outlook or a plunge in value of the ringgit, Mr Ahmad Husni Hanadzlah warned yesterday (June 3).

Explaining this, the second finance minister said if Putrajaya is forced to shoulder the 1MDB debt of RM42 billion (S$15.3 billion) on top of its development expenditure of RM52 billion for next year, it would cause the government to fail to meet its targeted Budget 2015 deficit of 3.2 per cent and revert to over 4 per cent instead, he said.

“What will happen? Our ratings will drop, when our ratings drop, our companies borrow from abroad, our currency value will drop like in 1998 then, when our ringgit at one point was over RM4, how to pay debts?

“In our context, the main thing is we must solve the issue of debt so the people do not have to worry,” he said in a live interview broadcasted by national television channel TV1.

During the 1997-1998 Asian financial crisis, the Malaysian currency dipped in value and at one point went over the RM4 mark in exchange rates against the US dollar.

In March, Putrajaya said it is accountable for a US$3 billion (S$4.03 billion) loan secured by a 1MDB subsidiary using a letter of support from the Malaysian government.

Last month, Moody’s Investors Services said government support of 1MDB could jeopardise Malaysia’s sovereign credit rating.

Today, Mr Husni also insisted that the rationalisation of 1MDB’s assets is not meant to “save” it or the government, but is instead a “restructuring” exercise with the aim of paring down its debt.

He also said his key concern was Malaysians, citing the chain of negative effects that would happen if 1MDB’s debt had to be passed on to the government.

But Mr Husni also stressed in the same interview that no money has yet been lost by 1MDB, pointing out that the banking sector would otherwise be the first to chase the firm for the money it borrowed in a bid to avoid a high level of non-performing loans.

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amansihat · Post time 1-8-2015 08:10 PM

The last time the ringgit was this low, the world was in the midst of a global financial crisis. In this piece, KiniBiz looks at what moves a currency and asks what is driving the ringgit down this time.

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Over the past few months, the Malaysian ringgit has, at times, been the worst performing currency in Asia against the US dollar (dollar). On Jan 20, the ringgit hit a six-year low to close at 3.60 to the dollar which was the lowest it had been since April 2009. Since crude oil prices began their plunge in the latter half of June, the ringgit has dropped around 11.8% in value against the dollar as at end-February.

Six years ago, the world had been in the midst of the Global Financial Crisis which began with the US subprime crisis which developed into a banking crisis and led to an overall global slowdown which took its toll on export dependent nations.

As the ringgit has depreciated against the greenback the ever present fears that another 1997/1998 Asian Financial Crisis or another 2008/2009 Global Financial Crisis might be at hand have resurfaced.

chart 1 1usd to rm 96 to 98

chart 2 1usd to rm 05 to 15

Bank Negara Malaysia (BNM) governor Zeti Akhtar Aziz however recently refuted that. She said “the ringgit’s weakness does not reflect Malaysia’s current fundamentals which are still strong.”

In this piece, KiniBiz looks at what drives a currency and what is causing the ringgit to depreciate against the dollar this time around.

What determines the value of a currency?

The ringgit is a ‘managed float currency’ which means that its exchange rate is allowed to appreciate and depreciate against other currencies according to market conditions. Bank Negara Malaysia will occasionally intervene to stabilise the currency in either direction when it sees fit but it does so without fixing or pegging the ringgit to a particular level to trade at.

Inside story image Bank Negara Malaysia 270115 04Just like any other floated currency the value of ringgit is determined by the interaction of its demand and supply in the international financial market.

It is worth noting that a currency either appreciating or depreciating does not necessarily have a fixed meaning, such as if it appreciates it is good and if it depreciates it is bad.

For instance, an appreciating currency will mean that exports earn more money but as they are more expensive, buyers might also look away from Malaysian exports to cheaper sources. It might be cheaper for Malaysians to travel overseas but would make travel in Malaysia more expensive for foreigners.

So a central bank will occasionally take steps to stabilise the ringgit’s position, and BNM has said in the past that it will only intervene to ensure orderly market conditions.

According to Barclays Bank Plc’s regional economist for emerging markets Rahul Bajoria, there are three main factors which play a role in a currency’s valuation. The first factor is a country’s growth and inflation rates which will affect its monetary policy.

The second is real effective exchange rates or REER. Which according to Investopedia is “the weighted average of a country’s currency relative to an index or basket of other major currencies adjusted for the effects of inflation. The weights are determined by comparing the relative trade balances, in terms of one country’s currency, with each other country within the index.”

Rahul Bajoria
Rahul Bajoria

And the third factor is productivity which is an abstract measure but can be viewed as a way to determine if there will be stronger growth ahead, said Bajoria.

He added that a particular currency’s perceived strength or weakness is a largely a reflection of a nation’s balance of payments (BOP), which consists of the current account (goods and services exports less imports) and the capital account (net result of public and private international investments flowing in and out of a country).

Essentially, the value of the ringgit will depend on supply and demand and the long-term impact of this is reflected in the overall balance of payments which show net inflow or outflow of funds. If there is inflow, there is higher demand for ringgit and if there is outflow then there is selling of ringgit to raise foreign exchange.

However, short-term demand and supply factors may not reflect long-term flows as they tend to be very volatile.

Why is the ringgit weak?

So what is driving the ringgit down this time?

Containers filled with oil cleaned up from the oil spill site are seen at Beilianggang port in DalianThe short answer is mainly the falling price of crude oil which affects sentiment on the ringgit which is made worse by outflows of portfolio investments in anticipation of the Federal Reserve’s ongoing cutbacks of quantitative easing which refers to slowing down the rate of Treasury bills and bonds. This effectively lowers liquidity creation in the US market which implies less funds available for future investment in emerging markets.

The price of Brent crude oil per barrel began to fall sharply in the latter half of June 2014 on the back of a global oil supply glut. And it continued to drop after the major oil producing nations under the Organisation of Petroleum Exporting Countries (Opec) refused to scale back production.

To date, the Brent crude oil price has fallen some 45.6% from around US$114 on June 19, 2014 to around US$62 as at end February 2015 as a result.

Although Malaysia is technically a net crude oil importer, it still derives a large chunk of its national income from oil-based revenue. Furthermore Malaysia becomes a net energy exporter when liquified natural gas is factored in and therefore lower receipts from those exports will hit the current account.

Comparing the charts, it can be seen that the ringgit often falls in tandem with the price of crude oil.

Chart 3 Brent crude oil per barrel and RM 2005-2009

Chart 4 Brent crude oil per barrel and RM 2011 to present

When Budget 2015 was tabled in October 2014, the government’s budgetary plans were based on the assumption that Brent crude prices would be at the US$100 per barrel mark in 2015. Therefore the sharp drop in oil prices led to serious concerns over the government’s ability to meet its budgetary commitments and fiscal targets.

In late January, the government moved to address these concerns by announcing a revised budget.

Prime Minisiter Najib Abdul Razak said the revisions were “a reality check following, among others, declining global crude oil prices.” In the updated version, the government revised its plans based on the assumption that Brent crude would be at around US$55 per barrel.

Nonetheless despite the revision both the prime minister and other key economic figures have stated that the perceived importance of oil-based income for Malaysia has been overstated.

Inside story image najib putrajaya event 060215 06Najib has pointed out that the fall in oil prices have actually benefitted the Malaysian economy in some ways. For example, he said it enabled the government to lower the price of petrol and this had increased the amount of disposable income Malaysians had to spend. Domestic consumption has been an important driver of the economy over the past year.

BNM’s Zeti too has emphasised that Malaysia is less reliant on oil based income than it was before. She noted that overall energy based income will only account for 22% of government revenue in 2015 versus 30% in 2014 which has mitigated the impact of low energy prices.

Following a good set of figures for the fourth quarter of 2014, Zeti said the ringgit had been affected by portfolio outflows and much of it is event and sentiment driven and therefore the ringgit’s weakness was not a fair reflection of Malaysia’s current fundamentals which are still strong.

“When it stabilises and has greater clarity, we expect the ringgit then to reflect our underlying fundamentals,” she added.

Also traders who take positions against the ringgit will have to close them off at some point and this will also result in some strengthening of the ringgit.

Barclays’ Rahul Bajoria agreed that sentiment has played a role in the falling value of the ringgit. He said for example, that the impact of the falling oil prices had been more pronounced for Malaysia because it is the only net energy exporter among the emerging markets in the Asian region. And when it was viewed against other non energy producing emerging markets in the region the situation looked far worse by comparison.

“There are other energy exporting emerging markets which have also been similarly impacted in other regions, so Malaysia isn’t a standalone case,” said Bajoria.

However Bajoria said that sentiment cannot be ignored entirely as it will be based on some level of facts. He opined that while perhaps the impact of the oil price plunge had been overstated, there were legitimate concerns over how the government’s fiscal policy would be affected as a result.

In the second part of this series, KiniBiz will consider the impact of low oil prices on the government’s fiscal policies and ask if the ringgit is undervalued.

T

amansihat · Post time 1-8-2015 08:10 PM

amansihat · Post time 1-8-2015 08:10 PM

amansihat · Post time 1-8-2015 08:11 PM

amansihat · Post time 1-8-2015 08:11 PM

amansihat · Post time 1-8-2015 08:17 PM

LONDON • China is in a currency quandary: How to promote the yuan in global trade while at the same time using it to stabilise market volatility?

The People’s Bank of China is holding the onshore version of the yuan at about 6.2 to the US dollar even as it pledges a bigger role for market forces.

In a single statement last week, China’s State Council, or Cabinet, said both that it would allow the currency to move in a wider range and that the exchange rate should be stable.

A freely usable yuan is a key requirement of the International Monetary Fund’s (IMF) special drawing rights (SDR) status that China is seeking.

Yet loosening controls while stocks are plunging risks the kind of swings that may spur capital outflows and disrupt the world’s second-biggest economy.

“The Chinese government is panicking a little bit as they take the equity market sell-off as a threat to its credibility,” said Mr Cliff Tan, the East Asian head of global markets research at Bank of Tokyo-Mitsubishi UFJ in Hong Kong.

“Different departments are coming up with what can be done, but they’re mutually contradictory.”

This tension is being borne out in markets, where the gap between the onshore yuan and the currency’s value in Hong Kong widened last week to 0.29 per cent, the most since March.

Foreigners have been fairly sanguine about the US$2 trillion (S$2.7 trillion) wiped off the value of mainland Chinese shares, as they collectively hold less than 2 per cent of the market.

However, they have major holdings in H-shares, the US$3.7 trillion market in Hong Kong-listed stock of mainland companies, and “dim-sum” bonds, the US$70 billion-plus market for yuan denominated debt issued and traded offshore.

While the onshore rate has remained fixed, the offshore yuan tumbled the most it had in three months on July 24 as the State Council’s statement sowed confusion among traders.

JPMorgan Chase and the Commonwealth Bank of Australia took the statement as a sign that China will relax the limit of 2 per cent moves either side of a daily fixing.

Achieving SDR status would be the crowning achievement of China’s efforts to boost global use of its currency and challenge the dominance of the dollar.

The yuan failed to make the cut in 2010 because it was not deemed to be freely usable. The next five-yearly review is scheduled in November. It is critical for China to adopt a flexible, market-based exchange rate to help correct the imbalances that are limiting domestic consumption, the IMF said in a report on Tuesday.

“The intervention has been very aggressive in the foreign exchange market during this equity rout,” said Mr Ken Peng, a strategist at Citigroup in Hong Kong. “That’s an easy target for those who are opposed to China joining the SDR.”

Widening the trading band will add unwanted uncertainty at a time when financial markets are already volatile, said Mr Koon How Heng, a Singapore-based strategist at Credit Suisse Private Bank and Wealth Management.

“There’s just no strong or clear valid objective at this stage to widen the daily trading band,” he said.

BLOOMBERG

amansihat · Post time 1-8-2015 08:20 PM

Bleak economic outlook for the Year of the Sheep – Lim Sue Goan
Published: 4 March 2015 1:08 PM

There were two pieces of bad economic news in this country during the Lunar New Year celebrations. Petronas suffered RM7.3 billion net loss in Q4 last year while petrol and diesel prices were both increased by 25 sen per liter.

Petronas' net profit for last year was RM18 billion lower, meaning shrinking national coffers tax revenue and reduced investments in the O&G sector which will directly affect the country's economic expansion.

In the meantime, higher fuel cost will further suppress consumer sentiment in the run-up to the implementation of GST next month.

According to the Merdeka Center survey in January, the approval rating of Prime Minister Datuk Seri Najib Razak among the voters in Peninsular Malaysia fell from 48% last October to only 44%, and most of them were unhappy with the economic situation such as higher cost of living and the upcoming GST implementation.
The economic outlook is not going to be rosy in the Year of the Sheep. If the economy heads south, political situation will become unstable and this will create opportunity for Umno infighting.

Unfortunately, we have seen that our leaders are far more engrossed in politicking than fixing the ailing economy. For instance, Najib should have attended the 2014 Economic Transformation Programme briefing on February 26 but he went to Sarawak instead, probably because a state election would be held there soon. The PM used to be very concerned about the ETP in the past, and had asked for live TV telecast.

On the evening of February 28, he attended the Malay Unity Rally and not the CNY Open House in Teluk Intan. He has placed too much emphasis on his Malay agenda and this contravenes the New Economic Model proposed earlier by the government.

The PM should put more focus on economy instead, in view of the plummeting international oil prices and a significantly weakened ringgit.

There are a few things we should take note. First of all the government's fiscal conditions.

Despite drastic fall in net profit, Petronas still paid the government RM26 billion dividends last year, although the payout has been declining in recent years.

In 2011, Petronas contributed RM30 billion to the treasury, down to RM28 billion in 2012 and RM27 in 2013. Moreover, the national oil company's investment ratio is also shrinking by the year, and this caps the company's future development.

Owing to increasing burden on the part of the government, eg. RM23.6 billion increase in public servants' salaries over the last six years, Petronas has started to increase its dividend payouts to the government since ten years ago, from RM9.1 billion in 2005 to RM13 billion in 2006, RM20 billion in 2007, RM24 billion in 2008 and a high of RM30 billion in 2011.

It appears that the government may have to look elsewhere to increase its funds in order to foot the expanding bill of its enormous operational expenses.

Salaries for public servants will top RM65.6 billion this year (RM81.9 billion if pensions were to be included), making up between 30% and 40% of the government's operational cost. Without streamlining the administrative team, the government may have to look to loans to pay out the salaries.

Secondly, it is imperative for the finance ministry to settle the RM42 billion debts incurred by 1MDB. The Cabinet has reportedly rejected the RM3 billion fund injection into 1MDB. The consequences could be very grave if the company eventually defaults on its debt settlement, culminating in the possible downgrading of the country's sovereign rating. The anti-Najib faction within Umno is now pecking at this issue.

That said, the government has failed to come up with a workable solution. Ministers and the Bank Negara governor are all shunning this problem. If 1MDB defaults on its loans, the government will not have the means to lift it out of hot water.

Thirdly, the government should support the ringgit. The continuous fall of ringgit has brought up operating costs for many businesses resulting in import inflation. In the long run, the depreciating ringgit will harm the country's economic fundamentals.

Owing to political considerations, it is unlikely for the government to trim the civil service force or to halt its money-distributing populist policies. Government contracts will not be reconsidered and the 1MDB issue shunned. There is little prospect we can hope for a turnaround. – mysinchew.com, March 4, 2015.

* Th

- See more at: http://www.themalaysianinsider.c ... thash.C8XVbb4c.dpuf

bangcak · Post time 1-8-2015 08:38 PM

Anak_Nogori replied at 1-8-2015 08:18 AM
Apa pun ingat kesan spekulasi persepsi IMDB ni kena ke Tun dan Najib je ke?.

Jangan kata sedikit ...

u silap.
ikut kata nazri, ringgit jatuh ni la petanda baik buat ekonomi.
cuba u tanya member kita @kemaruk pon sokong kejatuhan
ringgit nih.
pelancong berpusu2 membeli belah dlm negara.
jualan tikar mengkuang dan jualan songkok melonjak.