I am happy to read this piece of news from an article today. It quoted the Bank Negara Malaysia’s Governor Tan Sri Zeti Akhtar Aziz as saying that, “Right now, our interest rates are accommodative, and very supportive of the economy. We will review conditions but right now our economy is on a steady growth path and the interest rates support that growth trajectory.” It simply meant that the growth is still steady. Not awesome, not negative but still growing. Expectations from majority of analysts in terms of Malaysia’s GDP? Around 5 percent for 2015.
Today (23 March), Ringgit suddenly ‘appreciated.’ Okay, the two major reasons were stated. First one, US Federal Reserve gave indication for a less aggressive rate hike path. In other words, the momentum of US$ has been halted slightly. Second reason was due to “short-covering and expected technical pullback.” In brief this simply meant that the Ringgit was oversold previously and perhaps went down a little too much a day before. Yesterday, it was US$1 to RM3.72 and today it closed at US$1 to RM3.69 Ringgit was also up against many other major currencies except for Euro. I think Euro has also fallen a lot and perhaps should not fall further. Every expectation of Greece’s economic problem should have already been priced into the Euro’s decline thus far.
What about the potential for ASEAN’s single currency? Actually, I do not like single currency because all ASEAN countries are very diverse and I am not sure if Singapore would love to take the lead like what Germany has been doing for Euro. Perhaps one day when Indonesia really becomes a top economic superpower, we have a chance. Zeti said Asean region would not pursue a single currency. “We are going for financial integration to achieve the same objectives of greater collective growth,” she added. Her views were echoed by former Indonesian Finance Minister Dr Mohamad Chatib Basri who said that, “A single currency is probably the issue we really have to think carefully over. You can still have the integration and your own currencies.”
With a single currency, member countries may not even be able to decide the best interest rate adjustment that it could pursue for its own growth. Anyway, when we talk about accommodative interest rate, it also meant that this continue to be pro property as well. When the rates go up a lot, the house buying would go down a lot. So, for those who may be thinking of mortgage these days, suddenly fixed rates may be a potential choice too. Interest rates today is considered low as far as I can remember, based on my age. Ahem. Happy deciding.
written on 23 Mar 2015
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