At last, the Malaysian Ringgit is re-floated ...
Its about time that the Malaysian Ringgit is floated after being fixed to the the USD at RM 3.80 since September 1998. The date is today 22/07/2005. There has been a lot of speculation during the year of the currency being unpegged, but the Malaysian Govt. has always played coy saying that it is monitoring the situation closely especially if the Yuan is unpegged or floated and it may follow suit though not necessarily immediately.
But today, almost to the minute after it is announced that the Yuan is unpegged, the Ringgit peg is removed and allowed to float, albeit, it is said that it is a managed float within a small basket of currencies. It is never mentioned what currencies are in the basket, but it is definitely the currencies of the country's major trading partners such as China, Singapore, US, Euro, Japan and Britain, India and Saudi Arabia.
The Ringgit has been strengthening against most major currencies since April this year. So the fact that its floated rate today is at RM 3.77 to the USD does not come as a surprise at all. Some say that it may go as high as RM 3.50 to the USD without saying when it will do so; but I say that it would be as high as RM 3.40 or better to the USD by end of the year when the IFR of Bank Negara accumulates to the equivalent of USD 100.0 billion because Petronas would be accumulating a lot of foreign currencies as the oil price will continue to be fluctuating between USD 50~60 per barrel during the year.
Malaysia is under no pressure to unpeg its currency although China has been the object of US criticisms for deliberately, according to US industrialists, undervaluing its currency when its accumulated IFR is about USD 500~600 billion, second only to Japan whose IFR is now approacing one trillion USD. For the last 10 years, China has fixed the Yuan at 8.28 to the USD. But today, it floats at 8.11 to the USD - not much really, but it is a start. So is the Ringgit. Today it floats at 3.77 to the USD, hardly anything to shout about, but it is a start.
But today, almost to the minute after it is announced that the Yuan is unpegged, the Ringgit peg is removed and allowed to float, albeit, it is said that it is a managed float within a small basket of currencies. It is never mentioned what currencies are in the basket, but it is definitely the currencies of the country's major trading partners such as China, Singapore, US, Euro, Japan and Britain, India and Saudi Arabia.
The Ringgit has been strengthening against most major currencies since April this year. So the fact that its floated rate today is at RM 3.77 to the USD does not come as a surprise at all. Some say that it may go as high as RM 3.50 to the USD without saying when it will do so; but I say that it would be as high as RM 3.40 or better to the USD by end of the year when the IFR of Bank Negara accumulates to the equivalent of USD 100.0 billion because Petronas would be accumulating a lot of foreign currencies as the oil price will continue to be fluctuating between USD 50~60 per barrel during the year.
Malaysia is under no pressure to unpeg its currency although China has been the object of US criticisms for deliberately, according to US industrialists, undervaluing its currency when its accumulated IFR is about USD 500~600 billion, second only to Japan whose IFR is now approacing one trillion USD. For the last 10 years, China has fixed the Yuan at 8.28 to the USD. But today, it floats at 8.11 to the USD - not much really, but it is a start. So is the Ringgit. Today it floats at 3.77 to the USD, hardly anything to shout about, but it is a start.
posted by Richard Sorge @ 8:42 PM
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