Wednesday, December 21, 2005
[692] Of Finance Ministry, lies, damn lies and statistics
[692] Of Finance Ministry, lies, damn lies and statistics
Yesterday in the Malaysian Upper House, the Malaysian Finance Ministry Parliamentary Secretary was reported of saying that "ringgit is relatively stable compared with the currencies of Malaysia's major trading partners after the government removed the ringgit peg on July 21."
More:
The funny thing is, while what he said is true, somehow, I feel that he has conveniently omit what's going on in December 2005. For this month, the ringgit (tag) is growing weaker against:
USD
EUR
JPY
SGD
United States, Japan and Singapore are the top three major Malaysian trading partners.
From the graphs, capital flight is apparent.
Earlier last month, I realized that Malaysia seems to have a negative real interest rate. Soon after, Bank Negara raised Malaysian nominal interest rate up to 3%. At 3%, I feel the real interest rate is still negative. Another rate hike is a must for Malaysia to have positive real interest rate given that inflation is above 3%. A positive real interest might stop and reverse this December's run.
Unless the Bank Negara increases the rate and in turn, halts this gradual and minor capital outflow, I would hardly call ringgit as stable.
p/s - Chinese statisticians say: Whoops. We forgot to add USD280 billion into our 2004 GDP. With that corrected, we just want to say that we're the sixth largest economy in the world.
Others: Ack! You forgot USD280 billion? (Malaysian estimated GDP for 2005 according to Wikipedia is USD290 billion)
pp/s - SuprNova.org, the site that I depended on many things fun before it was shut down, speaks.
More:
Hilmi said that since the transition, where the ringgit exchange rate was determined by market forces, the local currency had risen compared with the euro by 11.9 percent, yen (9.7 percent) and between 0.2 percent to 7.7 percent compared with regional currencies.
"After the depeg and up to Nov 30, the ringgit has increased compared with the US dollar by 0.6 percent to RM3.7783," he said in his reply to a question posed by Senator Datuk Seri Lam Kang Sang at the Dewan Negara sitting, here Tuesday.
Hilmi said that the ringgit also rose compared with the euro by 3.8 percent and yen by 6.7 percent and mixed against regional currencies.
The funny thing is, while what he said is true, somehow, I feel that he has conveniently omit what's going on in December 2005. For this month, the ringgit (tag) is growing weaker against:
USD
EUR
JPY
SGD
United States, Japan and Singapore are the top three major Malaysian trading partners.
From the graphs, capital flight is apparent.
Earlier last month, I realized that Malaysia seems to have a negative real interest rate. Soon after, Bank Negara raised Malaysian nominal interest rate up to 3%. At 3%, I feel the real interest rate is still negative. Another rate hike is a must for Malaysia to have positive real interest rate given that inflation is above 3%. A positive real interest might stop and reverse this December's run.
Unless the Bank Negara increases the rate and in turn, halts this gradual and minor capital outflow, I would hardly call ringgit as stable.
p/s - Chinese statisticians say: Whoops. We forgot to add USD280 billion into our 2004 GDP. With that corrected, we just want to say that we're the sixth largest economy in the world.
Others: Ack! You forgot USD280 billion? (Malaysian estimated GDP for 2005 according to Wikipedia is USD290 billion)
pp/s - SuprNova.org, the site that I depended on many things fun before it was shut down, speaks.
