Ringgit falls to 3.87; foreign investors pull billions out of Bursa

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The ringgit has fallen to close to 3.87, a level last seen during the 1998 Asian Financial Crisis, due to uncertainty surrounding the 1MDB probe, the prospect of a US rate hike, and the plunge in global oil prices. Foreigners, meanwhile, have pulled billions of ringgit out of Bursa this year, exceeding the level for the whole of last year.


A friend of mine in KL who wanted to buy US dollars said a money changer quoted 3.90!

Indeed, the ringgit has dropped 9.5 per cent this year, making it Asia’s worst performing currency.

On 15 July, our international reserves dropped to US$100.5bn (or RM379.4bn, enough to cover 7.9 months of retained imports). But that is much higher than the 1998 level of around US$20bn (or RM99.4bn, enough to cover 5.7 months of retained imports).


source: tradingeconomics.com

But the cumulative net foreign outflow from Malaysian equities reportedly rose to RM11.7bn at end July. That’s more than the RM6.9bn outflow for the whole of 2014.

So foreigners are pulling out from Bursa. “Foreign investors have now been net sellers on Bursa for 14 consecutive weeks, the longest stretch of back-to-back weekly selldown since the 2008 Financial Crisis,” said MIDF Equities Research.

There are also concerns about our current account (trade in goods, services and investment income) balance in the balance of payment.


source: tradingeconomics.com

The fall in commodity prices, including the global oil price, will put pressure on the government’s fiscal deficit.

And our external debt is creeping upwards:


source: tradingeconomics.com

And the end does not appear in sight.

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benny

Malaysia’s stocks and currency have tumbled but bargain buyers don’t appear likely to step up any time soon as foreign investors remain leery, analysts said.

“Our economists are constructive on Malaysia’s medium-term prospects,” Khoon Goh, senior foreign-exchange strategist at ANZ, said in a note Wednesday. “Unfortunately, the fundamentals are being overshadowed by domestic political developments that have soured sentiment towards Malaysian assets.”Malaysia’s stocks and currency have tumbled but bargain buyers don’t appear likely to step up any time soon as foreign investors remain leery, analysts said.

http://www.cnbc.com/2015/08/05/why-investors-are-snubbing-malaysian-bargains.html

Yang

This is the fact, this is the truth, this is the REALITY

benny

Yes, the reality under BN:
The Malaysian ringgit has tumbled to a new low since it was unpegged from its fixed rate of 3.80 in 2005. As of 4.30pm today, the ringgit was valued at 3.9083 to a US dollar!

http://www.malaysiakini.com/news/307597

Yang

Don`t blame the govt or Zahid who want to bring in 1.5 millions bangla that contribute to the outflow of our exchange rates. And don`t blame the govt and Zahid that one day make our country swarmed with more bangla Muslim. Why didn`t you all blame your ownselves, the Chinese. After all its mostly the Chinese that employ all these Bangla and foreign national is it not. Who is contributing to cheap labour. Blame on TPP. come on man wake up. And don`t blame the govt or Malays or UMNO for one day making our country into an islamic and… Read more »

Ed G

Our economy would be worsed offed without the foreign workers given the fact that the locals are shunning the jobs being taken up by the foreigners. Moreover, these foreigners are more reliable than the locals who are somewhat plagued by the ‘ponteng’ and ‘mc’ culture. The dependent on the foreign work force is ongoing since the 1990s. But is the repatriation of money to their (the foreign worker’s) home country a major contributor to the weakness of the Malaysian Ringgit? If this is so, why is the gap between the Ringgit and Singapore dollar widening in Singapore’s favour? Isn’t Singapore… Read more »

benny

Ratings agencies may revise downwards Malaysia’s ratings if Bank Negara Malaysia continues to dig into the country’s dwindling foreign reserves to prop up the falling ringgit value, economist Prof Zakariah Abdul Rashid cautioned today. Zakariah noted that the country’s foreign reserves had fallen from US$ 140 billion (RM541.24 billion) in the first quarter of 2013 to US$100.5 billion by July 15 this year, while the ringgit’s external value had dropped from around 3.2 to the US dollar in 2013 to around 3.8. Last Thursday, news agency Reuters reported that Malaysia’s reserves fell by US$5 billion in the two weeks to… Read more »

Don Anamalai

Rakyat will feel the real impact of poor Ringgit when traders deplete their existing stocks of goods and have to pay higher to import goods, even our staples like rice from Thailand and China produce.

iSupercally

If many think Malaysia is bad, try go to some.SEA.countries or Bangladesh. Ok these.are the same then you can try UK or USA. You will know we are so much better off

benny

According to the Malaysian Institute of Economic Research (MIER):

GRIM OUTLOOK on Business Conditions Index – fell to 95.4 points
– Current Index (CI) registered gain
– Expectation Index (EI) lost 26.2 points
– Local and export sales outlook bleak
– Capacity utilization rate dips further

CONFIDENCE TAKES A FURTHER KNOCK for Consumer Sentiments Index
– CSI falls further to 71.7
– More consumers experience financial deterioration
– Financial and job outlook yawn
– Better incomes expected amid a weaker employment outlook
– Inflationary anxieties remain high
– Consumer spending less robust going forward

reference: http://www.mier.org.my

Ed G

A sinking ship can suck all those in its vicinity together into the deep waters.. Obviously the foreign investors do not want to be the ones being dragged down, so they choose to move away and watch from afar. They can easily come back after the storm has settled just like the 1997/98 financial crisis. Then, the unfortunate ones who were not capable of moving out or capitalized on the situation (like YTL Corp who snapped up properties along the Bukit Bintang) had to bear with the brunt of the fallout. These unfortunate ones happened to be the majority of… Read more »

benny

Speculation that the strength of the ringgit will continue to weaken has led to many stocking up on US and Singapore dollars in the hopes of a profitable cash-out in the near future. There is an obvious increase in demand for both currencies lately, with some moneychan­gers even running dry.

http://www.thestar.com.my/News/Nation/2015/08/04/Many-stocking-up-on-US-and-Singapore-dollars-They-hope-to-make-profit-when-exchange-rates-go-up-in-f/

S Tee

Anil should be better off than most of us. No need to answer to HASIL for your income is donation able to cushion you thru the trying times if shrinking ringgit ?

S Tee

Anil, contribution is different from donation. All the best!

Don Anamalai

Anil should consider expanding the scope of this blog to cover Middle east issues in order to attract ‘donation’ from there?

lim

For 22 years we were robbed … 22 years later we met even a more terror one. What is now left for us ???

Hurray !!! Everyone loves 1pm, the millions are donated into 1pm’s private account!!!

Why is 1pm so quiet about suing wall street journal when 14 days have long been lapsed ??? Looks like he can only fool his own but not the outsiders !!!

Yang

lim ; You are just simply one obsessive lackey. Are you blind or ignorant. Check out the news nice and proper. I have also mentioned it earlier. The PM is contacting lawyers from the US to take up the case. Next time check throughly before opening your mouth

lim

O! Steven Yang, plesse pardon i dont read your text as i dont waste my time on nuisance. If today the Pg govt did not impose those housing rules that affected you raking from the lower income group, i am sure today you are tearing and shredding 1pm into pieces. So, what made are you actually even your buddy tunglang felt sorry for you… enough said !!!

iSupercally

You don’t have to read my texts but I want the people to know you are talking lies just like the Cat

Yang

lim ; Just like the Cat and opposition always making use of some commentators here like Tunglang to play the sympathy game. Tunglang has been made use of and he does not know. He sould be feeling sorry for himself.

iSupercally

I thought you were going to migrate. Still here. Either we are good or you are not good to qualify

S Tee

A saviour to alert and inform the truth to adjust will not migrate lah……

iSupercally

We are not alone. Are we really the worst. India lost more than 14%, Japan 16%, Indonesia 12%

S Tee

Looks like the rakyat will have to cut down on indulging expenses. May be less outside food, and the food cost may go up due to less customers to cover operating cost so the spiralling effect goes on and on until we see more light at end of dark tunnel we are in….. 🙁

Johan @ Khun Pana

Yes, cost will rise . The cost of vehicle spare-parts , farming machinery , animal feed , construction materials would and will goes up. Let’s say that we are not paying in USD but in Renminbi. The value of China’s Renminbi is not like 10 years ago when it was hovering at RM40-RM45 to RMB100 It is now RM60+ to RMB100. But, always look on the brighter side. Since we are “cheap” , we can now takes on Vietnam. Cheap Ringgit is a major boast to tourism. If our Tourism ministry knows the trade well. We should have more resorts/hotels/… Read more »