Sunday, 29 October 2023Malaysian ringgit is falling down, falling down, my fair lady. Part 1.

Sunday, 29 October 2023. 1. Nilai ringgit susut bukti dunia hilang keyakinan terhadap Malaysia, kata Anwar 2. That was the prognosis then,it is now too. That others have no confidence in the manner of how this country is run . 3. Specifically, it's how the country's economy is managed.or to use a more imagination capturing phrase used by James Carville, it's the economy, stupid! 4. So, saying things like the ringgit has been falling down since Najib was the PM, looks suspiciosly pedantic to me. 5. Pedantic in the sense of elevating an important cause of our ringgit depreciation to a factor such as Najib's tenure as PM. The ringgit depreciation happened too during his time, so Anwars management of the economy is not to be totally blamed 6. Yes, but the rate of increase in the decline is fastest when Anwar is managing the economy. So, more than proportionate share of the blame must be borne by the Sungai long Bolshevik. 7. As to the issue of linkage to Najib's tenure as PM is concerned, it's for Najib's minders to answer. I shall not provide an econometrics analysis on that linkage. I am not interested in defending Ali babavum Najib moreover. 8. Not only is Najib not the present PM; He was succeeded by mahiadin Al Capone Yassin and the man whom people forget was ever the PM, ismail sabri. Saying the ringgit depreciation began during Najib's time ,does not lessen the pain from the bite of the gila monster. 9. We do not need a history lesson as to when the depreciation took place but what concrete actions are taken by PMx to arrest the ringgit decline. On the various sosmed updates, we want to see what is being done to the ringgit. 10. The public is actually feeling nauseous about social media updates of the PM eating here and there, attending kenduri Rakyat, or meeting sex crazed Ustad. The public wants to see what is being done about the ringgit. 11. The banal and pedestrian explanation given by the trade minister was equally matched by the PM's ignorance of economic matters. 12. The minister said, what's there to worry, our economic fundamentals are strong. Our growth rate, productivity, unemployment, inflation are all good. 13. Of course it's worrying. Now all our imports are more expensive. We have to pay more 14. If our economic fundamentals are strong, how do you explain our ringgit keep diving down? 15. Perhaps, it didn't occur to the PM, that the strong economic fundamentals were caused by spurious factors. That's why I said PMx is an economic novice 16. We just had 2 years of near total economic shut down due to the COVID pandemic. Any slight increase in the economic fundamentals, because we are starting from a lower base, will register extraordinarily very high digit growth . 17. So, the textbookish explanation given by the senator trade minister tak boleh pakai 18. But that kind of explanation appeals to the pm, who says he is not economics ignorant. 19. But as lawyers like to say, res ipsa loquitur, the facts speak for themselves. The economic facts glaring at us, soaring food prices, creeping inflation, menacing unemployment, slower FDi and the bete noire of all things, the bugaboo, the falling ringgit. These nullify the PM's claim he is not economics stupid. 20. If our economic fundamentals were strong as claimed by the senator minister, why didn't they arrest the depreciation of the ringgit? Or worse, the figures in the mind of the election loser were fictitious. Nang bohtee nang, kui bohtee kui 21.our analysis of the exchange rate of the ringgit must begin with basic building blocks of all economic analysis - the law of supply and demand . 22. Assuming that supply is kept constant, what are the factors that affect the demand of our ringgit? Why for instance, demand of RM not Rosmah ya, low compared to the demand of the SD! 23. I think it's time to distinguish the psychology of an investor and the currency trader. They may give different weightage to the factors usually given by academic analysts. 24. The currency trader for instance, may put a high weightage on interest rate differerentials. The investor looks at how the country is run overall. Things like inflation, corruption, gdp, total national debt, ease of doing business etc. 25. The currency trader deals in currency only. The investor builds plants, invests in people, machines. His psychology is different from that of a pure currency trader . 26. I wouldn't pay much attention to the stale story as told by the senator trade minister about economic fundamentals. He tells stories that explained nothing. 27. In fact, I see an inverse relation between an investor and a currency trader. More currency trading activities crowd out investing activities. 28. Why is that so? Because more currency traders mean higher interest, but higher interests make investors less attracted because to them the cost of capital will be high . 29. You have to decide then. Do you want more currency trading or investing? Our ministers are confused over the psychology of these 2 economic agents. 30. I won't discuss the academic bucket list that affects Fund managers cum investors. Things that you normally hear if you are sitting in an exam. Income rate differerentials, inflation, unemployment rate, national debt, GDP, political stability and so on. 31. The grouping together of fund managers and investors is in itself, reflective of the confusion understanding the psychology between a currency trader and an investor.