Sunny days ahead for Ringgit
The Ringgit has been soaring rapidly in recent weeks. Everyone in business is talking about it. Perhaps you should do some homework and find out why.
Another question: Is it good or bad for the Ringgit to keep rising this way? And can the uptrend be sustained?
Your politically correct question has not come at a more appropriate time. I like you!
What I'm trying to say is that the weather is very hot these days, and the scorching heat might have burned some brain cells. When tension is high, it is not a bad idea to calm down and look into the more pertinent financial problems.
Talking about the Ringgit, the local unit has risen to a high of 3.19 over the past two days, and has become the fastest appreciating currency in the region over the last three months.
The Ringgit finally has its day!
In March, Bank Negara governor Zeti was always seen with a smiling face. Behind the smiling face we could see the Ringgit fluttering upward.
There are a number of reasons for this, it has been moving alongside the regional big brother: Chinese Renminbi.
Recently, Renminbi comes under mounting pressure from the States. US secretary of the treasury Timothy Geithner made a surprise visit to Beijing lately, but he was not in the Chinese capital for a tea rendezvous with president Hu Jintao.
Even as Beijing said it would remain firm in its position soon after Geithner left, the Chinese currency has started to show signs of easing up.
Yes, with the Renminbi inching up, can the Ringgit stay put?
2. Malaysia's economic data have been pretty impressive of late, and this year's GDP growth, earlier predicted to be in the region of 5%, may look forward to even 6 or 7% according to some foreign bankers.
The first quarter growth has breached the 7% mark, and with exports going robust, we can easily see why Taiwanese investors are complaining of labour crunch.
With economy back on the growth track, interest rates rising in tandem, and foreign funds flooding in to grab the local currency, there aren't reasons for the Ringgit not to rise.
3. The New Economic Model unveiled by the prime minister has set the priority to make Malaysia a high-income country.
In a country where its currency is undervalued, the people's income couldn't go a lot higher. The appreciating Ringgit will be instantly reflected on the per capita income.
As for whether it is good to have a strong Ringgit, a strengthening currency will inevitably perk up export costs, eroding our export competitiveness.
But, if all regional currencies appreciate at the same rate, especially with Renminbi taking the lead, then Malaysia will not be disadvantaged.
At the same time, an appreciating Ringgit will make imported products cheaper, which will benefit businesses who need to acquire imported raw materials, machinery as well as consumer products.
A stronger Ringgit should also be good for those with children studying abroad.
In general, currency appreciation is a good thing for most Malaysians, and should have a catalytic effect on the government's effort to increase the national income and enhance the competitiveness of local businesses.
The facts that Bank Negara has not stepped in to check the rising exchange rate and that Zeti is recently seen with a brilliant smile should serve to reassure all that the latest spike is not just momentary but can be sustained for some time.