Trade surplus should mean higher exports conversion versus imports

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This is about our Ringgit. Yes, that currency which everyone talks about? Haha.  It is an update of what has happened to the ringgit based on Bank Negara Malaysia (BNM)’s measure to reduce ringgit volatility. Yes, this is definitely aimed at increasing the number of long term investors while keeping out short term speculators.  The full article in TheStar is here. The only two sentences that I would like everyone to note are as follows:

1.  “BNM data also indicates an improved balance between exports and imports foreign exchange flows, consistent with the trade surplus in the current account.”  (This is the main reason why BNM implemented these measures. Nothing to do with controls……………)

2. “For the months of December 2016 and January 2017, since the measures were introduced, exports conversion exceeded imports by USD372.9 million and USD741.3 million respectively.  (We have trade surplus, so of course the conversions from exports should exceed the imports. If this continues, then the foreign exchange should show positive increments as long as Malaysia maintains our trade surplus)

Oh yeah, the GDP for Q4 2016 was also announced. Here’s the full article in TheStar. Bank Negara said, “While the external environment may continue to remain challenging, the Malaysian economy will experience sustained growth with the primary driver being domestic demand.” Growth during the quarter was supported by the strong showing in the manufacturing and services sectors, while steady private spending helped to mitigate a decline in Government spending.

Lastly, this is what Warren Buffet says about an investor versus a non-investor. “Calling someone who trades actively in the market an investor is like calling someone who repeatedly engages in one-night stands a romantic.” I believe this is what BNM was trying to do as well. To attract investors.

Thanks for following.

written on 17 Feb 2017

Next suggested article:  BNM: Stabilising ringit is priority and welcoming long-term investors

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