Tengku Zafrul doesn’t see ringgit meltdown right under his nose

WHILE Finance Minister Tengku Datuk Seri Zafrul Aziz is busy TikToking away to convince the public that Malaysia’s economy is on solid footing, the ringgit continues to descend, putting Malaysia’s debts in foreign denominations in a very precarious situation.

In addition, given that Malaysia has very high net food imports, the food cost for the many Malaysians is expected to spiral.

“Malaysia’s unbridled politicking is not helping the ringgit situation either. On the contrary, exposing it fundamentally to the levels never seen in Malaysia’s history for more than 24 years,” warned EMIR Research’s CEO Datuk Dr Rais Hussin in a commentary.

“Seminal research in economics and finance over the decades established that the strongest predictors of imminent speculative attack on a currency among many factors are the behaviour of the home country’s international reserves, the real exchange rate, domestic credit, credit of the public sector, and domestic inflation.”

The existence of such indicators, according to the independent think tank, would severely curtail the Government’s ability to defend any speculative attempt to devalue national currency successfully.

As UMNO/Barisan Nasional (BN) politicians who are entirely out of touch with the reality are voicing the possibility of the 15rh General Election ((GE15) drawing closer amid the monsoon season, Rais said the greenback/ringgit exchange rate has broken all the important technical levels to watch.

“And, technically, nothing is stopping it now from reaching as high as RM5 per US$ 1, probably finding an intermediate resistance around the 4.80 level unless there is a fundamental reversal in form of credible policymaking and lessened politicking,” he projected.

Although Tengku Zafrul and other avid proponents of ringgit depreciation accuse their opponents of looking at only one side of the coin, Rais cautioned that “they themselves appear to suffer from myopia, cherry-picking and making broad book-like brush-stroke statements while leaving numerous parameters out of the equation”.

“The only credible way to simultaneously fight inflation and currency depreciation is to develop a larger domestic market with less and less reliance on both imports and a seemingly supportive commodity-exporter position,” he proposed.

In Rais’ view, expanding Malaysia’s domestic food market with completely localised supply chains should be the Government’s priority as its potential spill-over effects will deepen and spur other domestic economic sectors, including high technologies.

“Perhaps, only those who welcome colonisation, foreign and local, in their country could think of “more benefits” to a depreciating home currency in the modern 4IR (Fourth Industrial Revolution) world,” he chastised. “And, perhaps, even (incarcerated ex-premier Datuk Seri) Najib (Razak) could have been a better Finance Minister.”

On the hindsight, Rais said it would also be unfair to say that Malaysia’s Finance Minister is not doing anything.

“On the contrary, he appears to be very busy persuading the telcos into the questionable DNB’s (Digital Nasional Bhd)  Single Wholesale Network (SWN) model – ihis apparent ‘flagship project’ for nation building. The future is indeed blaise,” added Rais. – Sept 21, 2022

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