FX THOUGHTS : SGDMYR MAKES HISTORY, SO WHAT ?
No sense freaking out that SGDMYR has hit a historic lifetime high today, breaking 2.74 to clock a 2.7416 this morning and trading at 2.7311 as I type.
SGDMYR quarterly candlesticks chart
Most people brush it off as the domestic political saga across the Causeway that has led to the MYR weakening 1% in the past week against the USD despite oil prices stabilising which is evident in the IDR’s relative strength.
The country is facing an illegal migrant scandal, a bankrupt national airlines and of course, the 1MDB sovereign fund troubles that has been on going for a while now. https://tradehaven.net/market/fx/malaysia-economics-does-not-work-in-a-sentiment-war/
Back to basics.
Singapore does not need Malaysian ringgit as much these days as imports have been on a downtrend for years. Perhaps we can say Malaysia is less reliant on the Singapore port as much as they used to in the past, having their own Klang, Kuantan and Johor.
Well this is how the trade numbers look.
(Bloomberg) — USD/MYR NDF buying led by Asia-based leveraged and macro accounts, according to FX traders based in the region.
1-month NDF up 0.3% at 3.7224, strongest since April 16
Spot USD/MYR up 0.4% at 3.7122, strongest since April 15
NOTE: Ringgit may hit 1998 levels if 1MDB debt unpaid, Malay Mail Online reports
5 June 2015. Police have ordered for dialogue on 1MDB with NGOs in Kuala Lumpur Friday to be cancelled in interest of national harmony and peace, Malaysia police chief Khalid Abu Bakar says in Twitter post.
NOTE: PM Najib Razak was to meet NGOs today in Putra World Trade Centre to explain on 1MDB; former prime minister Mahathir Mohamad was also invited
Given that foreign reserve holdings for Malaysia has fallen below US 100 billion, how could traders estimate the buying power of the Malaysian central bank?
If i’m not mistaken, MYR is under a dirty floating currency regime.