Up, up and away!!!

Ringgit was at RM3.17 for a greenback yesterday. Yea we are on our way back to 1997. Remember, we used to be at RM2.50 per greenback! What created this "scramble" for ringgit? Was it a quarter of a point raised? Or was it a better gdp forecast by a foreign house? Obviously it doesnt take a huge sum of money to raise the ringgit.
A credible better forecast will do wonders and in a very short period of time. To have a better forecast, means the gov has to come up with a lesser forecast first, because the keyword here is "a better forecast by a credible foreign house". Hypothetically speaking, will the RM climb this fast only if foreigners come up with a good forecast but without the lesser, average forecast by the gov? I dont think so. The better than expected forecast created the bottleneck for the scramble.

Now you see we dont need a huge interest raise to have a strong currenccy, again hypothetically you can look at Japan's rate to rule out otherwise. Fundamentally speaking, all we need are strong demands, from the monetarists and a new one from our globally operating local companies.

Strong demand from monetarists is not new, so better skip to our GOLC, i.e. Petronas. I believe half of the revenue at Petronas is coming from overseas operations, so perhaps at least half of the (pre tax?) profit also will be coming from outside, and that would be a good demand for our currency. It would be in tens of billions of RM$!!! Unless they dont convert them, so it wouldnt mean anything as US$ can be used widely here, but imagine if they convert them into ringgit...Of course there are other companies that can follow suit. What if EPF, PNB, Khazanah, CIMB repatriate their profits back? That would be another tens of billions of RM (just dont forget to increase your overseas exposure first!)

Just to say, that you dont have to raise the rate so much to have a strong currency.A good forecast will do the job, but a better forecast from the foreigners will boost it further!

Hope they know when to pull the brake...