Here’re Why Ringgit Can Go Further – RM4.50 To US$1 – And Beyond

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Aug 24 2015
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Malaysian Ringgit has just hit another new high – RM4.2570 to one US dollar. Forget about what the specialists and experts say about the local currency. Didn’t someone tell you less than a month ago that ringgit is to trade between RM3.80 to RM4.10? Well, screw them because they know nuts about the actual financial world.


Chances are you could learn more watching the softcore pornography “The Wolf of Wall Street” than reading rhetoric and theories from those currency experts. Alternatively, go read the “30 Investing Tips & Tricks You Won’t Learn At School“. Get real – not a single person in the world knows what the market will do next.

Khan Academy - The Wolf of Wall Street

You had asked us when the ringgit was trading below RM3.90 if it was going to hit RM4.00 for every single US dollar. Our answer was “Why not?” Now you may want to ask if the ringgit can go to the unbelievable RM4.50 to a buck. Again, our answer is – Why Not? Yes, we think RM4.50 to a US$1 is very reasonable and is going to happen.


While some of our readers are laughing all the way to the bank by just buying and selling US dollar at money changers, we’re praying and hoping it could breach RM4.50, RM4.80 or even RM5.00 level soonest possible. That’s because we’re trading U.S. stocks and options hence our profits are now worth a bomb (*grin*).

Ringgit vs USD - 24Aug2015

Do you know that even if your stocks or money parked in the U.S. haven’t appreciate a penny for the last 3-months, you still earn a handsome profit of at least 15% if you were to transfer it back today, thanks to the ringgit’s free fall? And if you’ve your US dollar 12-months ago, your profit is about 31%. That speaks volumes about how weak the ringgit has been.


Heck, as a matter of fact, Malaysia’s ringgit is the worst developing-nation performance this month after Russia’s ruble. Najib can open his big mouth and continue poking fun that the ringgit was worse during Mahathir’s time. Zeti can also continue singing the same boring song about strong fundamentals. Ringgit is on a free fall, so deal with it.

Malaysian Ringgit Toast - Najib Razak and Zeti

But there’re more compelling reasons why we believe the ringgit will hit RM4.50 sooner that you can imagine. It seems powerful people aligned to Jiang Zemin faction are sharpening their knives for President Xi Jinping. Last Thursday, CCTV and other Chinese state media carried a surprisingly blunt and negative commentary reports about Xi’s reforms.


It was like UMNO’s mouthpiece – Utusan – started questioning Prime Minister Najib Razak’s scandalous 1MDB’s RM42 billion and asking if he has indeed secretly pocketed the RM2.62 billion before it was exposed. Adding a new leadership crisis into an already scary financial meltdown is the last thing you want to see in China.

Jiang Zemin and Xi Jinping

But the present crisis is the best opportunity for highly corrupted Jiang Zemin faction to weaken, if not to eliminate Mr. Xi Jinping. It’s a no brainer that China is set to devalue its currency again, until they get it right. Any technical rebound in stock markets will be used to take profit or loss cutting. Nobody likes catching a falling knife during bearish period.


We also believe that Bank Negara Malaysia isn’t serious about propping up the ringgit. On the contrary, Zeti and her boys are secretly and slowly letting the ringgit get smoked so that the country’s goods can become more competitive in line with China’s Yuan devaluation. It’s pointless burning the less than US$100 billion in reserve, in a war you can’t win.

Barisan Nasional 2013 General Election Campaign - Najib Razak Poster

Politically, if Najib could be defeated in the coming budget session in October, or a vote of no confidence in Parliament, he will most likely advise the Agong (King) to resolve the Parliament for a new federal election to be held on the 222 parliamentary constituencies. By hook or by crook, he has to win big, once and for all.


And to win big, the prime minister has to spend like crazy. Assuming his billions of US dollars from 1MDB are still hidden in Cayman Islands or some pirate ships in the Caribbean Sea, that money has appreciated at least 30% based on today’s exchange rate. Example: the same amount of US dollar in getting RM42 billion a year ago can get you RM55 billion today.

Najib Razak - Pirates of the Caribbean

If they let the ringgit collapse further into the toilet bowl to 4.5 rate, the same US dollar could get additional RM4 billion to RM59 billion. So, regardless whether the goal was to make local products more competitive or for Najib’s federal elections preparation, a weaker ringgit is certainly a preferably option now.


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