Monday, March 9, 2009

Ringgit gets weaker against the US dollar

The US is in a financial deep hole but it has continued to remain a safe haven. It is still regarded as the best exchange by the world, even as if its economy is near bankrupt. The continued trading for the US dollar, unfortunately, has weakened the ringgit. Last week, the ringgit was at a three year low against the dollar when it closed at 3.7175. The ringgit has fallen 16% from the decade high of 3.13 hit last April, The Star reported.

The prediction is that the ringgit would weaken further and slid to the 3.80 level in the near term. Translated that means parents with children studying the US would have to fork out more money, our purchases of American products, such as computers, would be costlier and those having to travel to the US would be more expensive. For Malaysian factories, the cost of production would be heavier when bosses are already facing a slump in orders. The weaker currency is certainly not an advantage for exports, says manufacturers. It's another bitter blow.

But Malaysia is not an exception as other currencies have been hit as well. The good news is that our foreign exchange reserves is stable at US$91.1bil. The disturbing news is that while the dollar is an international currency, it is not comfortable to learn that printing more green backs is hardly rational economics.

We can expect some serious bad news this year, with the World Bank predicting the economy crisis is the worst since the Second World War. With developed countries in financial ICU, the poor nations in Africa would be hit the most with financial aid virtually dried up. Hand outs from NGOs and aid agencies are over. That's the grim news.

At home, our politicians, the media, the bloggers and people should be spending their time talking about the economy and nothing else. Unfortunately, the financial stituation has failed to get the same emotional response as in politics. Bloggers can tell you that economic related postings evoked little response.

The unfortunate reality in Malaysia is that the political tsunami is not over after a year. The entire nation seems to be still in campaign mode. Umno is too busy with its party polls. Pakatan Rakyat is in full swing making preparations for a bigger political tsunami. The coming economy tsunami - leave it to the bankers, businessmen, economists and employers. Yes, Tan Sri Zeti Akhtar Aziz, thanks for your tight regulating of the bank industry, now we are seeing the results. But can we get back to the Democracy Tree in Perak, which is more interesting?

Some of us are wondering how much space would be devoted to the financial crisis at the Umno general assembly. As the biggest ruling party, we expect to hear in depth speeches on how we intend to grapple with the situation. It must go beyond the PM, DPM and Finance Minister II. From the People's Congress Meeting in China to the Singapore Parliament, the main agenda remains the economy. Can we hear speeches with substance on the economy and less on race from the delegates? That should be Umno's biggest agenda.

It is no longer about which ethnic community gets what when the cake is fast disappearing. But a question of putting food on the table for all races. Umno delegates should never lose sight of that because it means nothing to Umno if the economy worsens. All the oil, rubber and palm oil won't help us if there is no demand. The small holders in Felda would be affected, please remember, and they wouldn't care about what the economists says. The bottom line is that their pockets would be hit and BN would be blamed. That is the political crisis faced by ruling parties worldwide as they become casulties of the financial tsunami.


K L said...

If not careful, we will be turned into Banana Man (Language issue) and our currency into Banana Ringgit !
Wake up all ! Financial Tsunami is far worst than Political Tsunami !

Anonymous said...

As recently as 60,000 years ago, we all lived in Africa and shared the same mother and father. See this video:

Therefore, it is incorrect for intellectually challenged politicians to say that one race is superior to other races when the scientific fact is, every single human being on this planet belongs to the same race: Homo sapiens.

Let us not forget the lessons of apartheid in South Africa and Nazism in Germany.


Anonymous said...

What's the problem. Malaysia still have a long way to catch up with Zimbawe.
Do you think the politicians care. A simple solution for the Perak political impasse is available, going back to the electorates for new mandate and stubbornly resisted.
How the hell, do we expect the UMNO-BN govt to solve the full weight of the global financial crisis that the nation is facing, when they put put politics above everything else. This will undoubtedly have grave consequences to our economy. Malaysians deserve what they got for putting monkeys running the country.

Anonymous said...

Who cares about the ever weaker ringgit and our economy dire straits.Most important is to ensure Najib become PM, Toyo the new Youth chief and Taib silencing the vocals with a repeat may 13threat- new firebrand leaders to lead us in the next 20 years.How's that for a so-called great example of a multiracial society show to the world?

Anonymous said...

Yep I know Chun Wai.
On Friday went to the bank to send some birthday cash for my daughter studying at the University of Chicago.
Came out crying.
It's just enough for her to spend her birthday with pals at the Penang Restaurant in downtown Chicago where satay, rice and two dishes plus dessert cost at least US$100.
Not enough for her to take in a movie or see a play.
We appreciate The Star for continuing to remind our politicians that it's the ECONOMY, stupid.

Anonymous said...

"The World bank reveals that developing countries face a financing shortfall of $420 billion to $1.09 trillion this year, as private sector creditors shun emerging markets, and only one quarter of the most vulnerable countries have the resources to prevent a rise in poverty.

It says international financial institutions cannot currently cover the shortfall, which includes public and private debt and trade deficits, for these 129 countries, even at the lower end of the range."

Why is the DPM Najib, so confident that we will ride out of this financial storm without wounding our economy too seriously?
Is'nt the falling RM gives some indications that the worst is yet to come. Instead of uniting the country and tackle this serious problem headon, he is more interested in seeking personal glory. Is this the man who will be Malaysia Prime Minister?!

amoker said...

I wonder what is Najib doing? YOu are right, nothing is happening. 7 billion, 10 billion ... goes nowhere.

Anonymous said...

With or without political tsunami March 8, ringgit will still get weaker against USD in current world economy climate.
Ringgit could uphold and avoid larger weakernning(ie co-relate to other currencies)if it was handled with proper, highly integrity, sound governance and managemnet excellence, won't we agree ?

Anonymous said...

Enough said.Everyone knows about the tsunami but the issue is do we have enough competent people in government to handle this crisis. The actions of the BN government do not inspire confidence of Malaysians let alone foreigners.We neither have the political will nor the expertise to handle this.Sorry Malaysia is doomed!!

Anonymous said...

We are sick and tired of UMNO's antics. It has reached an overdose stage.
We can't wait for UMNO to get kicked out. That summarise the feelings of most Malaysians.

Anonymous said...

dear Datuk Seri,

salam sejahtera.

perhaps it would be too much to hope for, i.e UMNO GA to talk about economy.

i wonder where was the last time the delegates actually interested about larger economic issue, you know, something more than just projects and tenders.

anyway, the economic tsunami is very real and depressing, particularly for lower income group and middle-lower income group.

one does not have to look beyond Malaysian border and compare other countries fiscal or monetary policies to assess our current economy health.

just take some time and walk along the hypermarkets, pasar malam, hawker centres and shopping malls.

from there, we can see a clearer picture, if not a bleak picture.

of course, this is just raw observation. but those were actual indicators, how the public spend, where they spend and what they spend on would give us a snapshot on the real economic situation (read pain)on the ground.

dont take my word for it, please, i am no econ major, just another ordinary fellow who spent too much time talking to Pak Ali, Mak Long and aunty Guan. you know, they like to share stories like beli belah, masak masak untuk keluarga, sayur dan ikan, tambang bas sekolah and duit poket anak ke sekolah.

when wallets are thight, so does the muscle on their faces.

we can talk about by-elections, political tsunami, pokok demokrasi till cows come home.

but when food started to disappear from the dining table, that's where the real problem starts.

a mandarin-speaking Malaysian Chinese who has less spending power despite the same amount of salary.

Anonymous said...

You are right that Malaysia's foreign reserves are at US$91.1 bln.

To make it a more valuable statistic, it was at US 121 bln in July 2008.

I thought that it would be factual to state that our reserves have been dropping.