KUALA LUMPUR – August 12, 2015: An explanation by a blogger yesterday stood out amidst the unhappiness expressed by many Malaysians over the falling of ringgit against the US dollar.
Via the latest posting in his blog, A Piece of My Mind, blogger Goh Wei Lang, argued that the depreciation of ringgit was not entirely the government’s fault as believed by many, but instead largely due to external factors, including the drop in world oil price.
He pointed out that Malaysia is not the only country whose currency has depreciated.
“Russian Roubles lost 114% against USD.
“Indonesian Rupiah lost 51% against USD.
“Indian Rupees lost 38% against USD.
“Norwegian Krone lost 37% against USD.
“Australian Dollars lost 24% against USD.
“Euro lost 20% against USD.
“Thai Baht lost 10% against USD.
Goh reminded Malaysians that the United States is “not our only trading partner and the performance of our ringgit is not measured against US dollars alone.”
“We strengthened against Canadian Dollars (2%).
“We strengthened against Indian Rupees (10%).
“We strengthened against Japanese Yen (14%).
“We strengthened against Indonesia Rupiah (18%).
“You may say it is history and you may continue to slam the Prime Minister, the Central Bank and the government for today’s numbers.
“But the next time before you get upset and share your anger on Facebook or Twitter, ask yourself whether or not the Ringgit – Dollar exchange rate affects you, and how.
“Do you shop online from US websites? Are you planning to fly over to US for a holiday? Are you a Malaysian studying in the US?
“Do you import goods to be resold in Malaysia? Do you buy necessities and food from the US to use here? Do you at all use the US dollar in your daily life?
“Because my dear, only if you answer yes to the above, you are affected. Otherwise, what are you shouting and so worried about?” Goh wrote.
The ringgit closed 0.7 per cent lower against the US dollar yesterday, hitting the 3.96 per dollar for the first time since the Asian financial crisis 17 years ago.
Goh’s posting was quoted by several prominent bloggers and news portals.
A random check of the cyberspace by The Mole indicated that many Malaysians prefer to blame Prime Minister Datuk Seri Najib Razak and the government for the sliding of ringgit.
Facebook user Hajjah Saadiah Suluhee: “Happy our money has little value do we look stupid? Yeah Najib the best…at least we are aware of it.”
Muhammad Haqimie Hasim: “All we want is for Najib to step down. And we are not talking about the MYR (Ringgit) value to USD solely.
“We want Najib to step down and this issue is one of the many reasons for him to be demolished from the PM (Prime Minister) seat.”
GreenGoblin: “This is a person who may not understand finance yet holds the top position and when something like this hits, he is like a deer staring into the car’s headlight.
“Surely now waiting for others to brief him so he can learn his lines and come out and make a statement but not take questions.”
Pandikarp: “You know why he (Najib) is silent. Because he is helpless and totally is clueless about what to do. He is not able to make decisions that can halt the ringgit’s slide.”
Some even harped on how it was timely for Najib to re-peg the ringgit just as it was previously done during the 1997 Asian Financial Crisis.
During the crisis, Tun Dr Mahathir Mohamad who was then the prime minister had locked the ringgit at RM3.80 to the dollar and placed restrictions on the movement of capital into and out of the country.
However. blogger Hishamh, in his latest posting argued that such move may not have the same positive results all the time.
He cited a prominent American economist Milton Friedman, who said that the success in pegging one’s currency is down to luck.
“Despite Milton being labelled as the standard bearer for floating exchange rates, he often stressed that the choice is not easy, and he has repeatedly emphasized that countries have achieved both good and bad results with fixed and floating exchange rates,” he wrote.
HishamH compared Israel’s success in implemented a fixed exchange rate policy against the dollar in 1985 with an earlier failure by Chile to do the same in 1976 .
“When US monetary policy was seriously tightened between 1980 and 1982, causing the dollar to surge, monetary policy in Chile also had to be tightened.
“In 1982 it (Chile) abandoned its fixed exchange rate policy.
“Friedman used the two cases above to underline that identical exchange rate policies can lead to different results.
“The outcome of the fixed exchange rate policy depends on how “lucky” one is with regard to the monetary policy in the country whose currency one has fixed to,” the blogger wrote.
Prominent blogger Datuk Ahirudin Attan was also against the idea of pegging the ringgit now as he contended that it was not yet necessary to do so.
“Dr M (Dr Mahathir) announced the “unthinkable” move of pegging the ringgit at 3.80 to the dollar on 1 Sept 1998, the same day he sacked Anwar Ibrahim as his deputy.
“By then our currency had fallen to RM4.80 to the dollar. Yesterday, the ringgit hit RM3.96 against the US dollar, lowest since the peg but a long way to go to RM4.80,” he wrote.
Ahirudin substantiated his views by posting a WhatsApp conversation he had with Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar, who is an ex-banker.
According to Wahid “the circumstances are very different back in 1998 compared with now. The fundamentals have changed.”
“Back in 1997/98, Malaysia had international reserves below USD30b sufficient to cover only 3.2 months of retained imports.
“We had trade deficit (1994-1997); corporates were highly geared with many borrowing in USD when their income/assets were in MYR (ringgit).
“Now even after the recent outflows, our international reserves is more than 3 times larger at USD96.7b as at 31 July 2015, sufficient to cover 7.6 months of retained imports.”
Ahirudin also holds the opinion that the call for locking the currency was just a theatrics of the opposition “who wants Najib kicked out.”
“Because that will create the perfect crisis that could very well spell BN’s end in the next general election,” he added.