financial knowledge

Looking at RM versus more currencies

Looking at RM versus more currencies

Too many people are trying to ‘sell their business or their programme’ by harping on ringgit’s depreciation versus the US$. It’s like if anyone are still foolish enough to invest in Ringgit based investments, it will be the end of the world for them. (the investors). By the way, I remain extremely confident with the Ringgit especially currently when Ringgit is definitely undervalued if we look at the trade surplus. Countries with trade deficits, their currency should drop! Else we are no longer talking about fundamental and more on speculation.

Anyway, perhaps we start with just Ringgit versus some major currencies, ok? Or perhaps all these other major currencies are all in trouble too? Since they have also all depreciated versus the US$. So the only country who is the best to invest into is America? Erm…

#1 – RM vs Yen. 5 years ago, RM1 can only get 25.85 Yen. Today, it’s 30.33 Yen. Ringgit has appreciated vs Yen.

#2 – Pound Sterling vs RM. 5 years ago, 1 Pound can get RM5.58. Today, it’s RM5.38. Ringgit has appreciated versus Pound Sterling.

#3 – Euro vs RM. 5 years ago, 1 Euro can get RM5.04. Today, it’s RM4.54. Ringgit has appreciated versus Euro.

#4 – RM vs Chinese Yuan (RMB). 5 years ago, RM 1 can get RMB 1.57 Today, it’s RMB 1.52. Ringgit has appreciated (very marginally) versus RMB.

Let’s look at our valuation model; DEER

Article in DBS Foreign Exchange and Macro Strategist Chang Wei Liang wrote in a note on Tuesday (Aug 2) that an under-valued ringgit has unsurprisingly bolstered Malaysia’s 12-month trade surplus to a record high of over US$60 billion, which is double of its pre-Covid-19 norms of around US$30 billion. The DEER valuations as below image.

Take action as per what you believe, there are no certainty these days

Would Ringgit depreciate further? I have no idea. Would it appreciate? I also have no idea. I am just giving you another perspective which you may not have seen because if you relied on social media, it shows you MOST of the news that you want to read / see. That’s why we think something is like that but the truth is because we did not have the other perspective in order to make a more rational decision.

However, to simply invest into whatever scheme by someone who gave you all the bad news about Ringgit because you think Ringgit is the worst currency in the world means you are not well informed. Happy investing and remember that we live in a very uncertain world. Always go back to fundamental and less of just speculative investments all the time. On a longer term, one will provide a consistent return while the speculative one may give us huge returns or maybe big losses too. All the best.

Property News Malaysia? Sign up for daily investment news updates (FREE since Nov 2013 and FOREVER). Alternatively, Follow me on Telegram here.

Please LIKE FB page to get daily updates about the property market beyond articles. Else, follow me on Twitter here.

Next suggested article: Dump property investment lah


Leave a Reply

Your email address will not be published. Required fields are marked *