Monday, February 22, 2010

Kill all birds with one stone...

Rising petrol price, inflation, investing overseas, more money inflow etc...what do they have incommon?

Believe it or not, it should be a stronger currency! Relatively higher, fluctuating within a manageable band! But many monetarists prefer interest rates hike rather than this one. Imagine if petrol price climb for another round and our RM stays at the same level, another price hike is inevitable. The worst impact will be the inflation that comes along with it. It can bring down goverments!

How are we going to be a global player if our currency is cheap? Investing in EU, US, Japan or even Singapore will sound ridiculuous. The bankers are complaining of low interest rates would chase away deposits thus disturb their cash flow. But I isnt the mergers into megabanks should be able to take care of this issue? Mergers should be able to reduce operating cost, create better economic of scale thus improve banks profitability.

I really think we should forget about tweaking the interest rates totally, unless they are thinking of knockin it downward! But get ready, oil is on its way up again, very soon!