RINGGIT HEADED FOR 5.00 SHOCKER: UNBEARABLE FINANCIAL LOSS FROM NAJIB'S 1MDB FIASCO

I started this blog in response to lies by Pemandu consultants on the workings of the exchange rate and Pemandu's continued insistence that 1MDB did not have an effect on the currency.

I completely refuted their arguments and provided facts of my own. At that time, I also made a very bold prediction by stating that the Ringgit could trade at RM 4.50 before the end of the year when it was trading at around RM 4.08 around early last month.

You can read it here.

People were afraid to state that it was not out of the question that RM could trade at 5.00 due to the 1MDB issue and investors lack of confidence in Cabinet 1MDB because Dahlan & Keruak had warned that making such comments could be termed as economic sabotage.

You see Keruak & Dahlan want us to live in the make believe world they are living in.

Today the RM is currently traded at RM 4.475 to the US Dollar. It is just 2.5 sen below what I considered a worst case scenario, but now market participants are begining to see that RM 5.00 to the US Dollar is not beyond the range of possibilities.

Considering that even when Tun Dr Mahathir had to endure an economic crisis, a stock market crisis and a currency crisis caused by external factors, the Ringgit's worst performance against USD was only RM 4.80, it begs the question that why has Najib allowed the 1MDB crisis to engulf the country so badly that we are now almost touching the lows of the worst economic crisis in a lifetime?

I think the issue is that the current administration and leadership are too "syiok sendiri" to understand that they cannot run a country with a huge requirement for foreign financing but still playing in a village style mentality.

This issue has not been well understood by many people including prepaid / postpaid bloggers and Government people as well. You see, even though we do not borrow in foreign currency, we still require foreign currency funds to buy up a whole load of Government and Corporate debt. This may not be as risky as borrowing in foreign currency, it does however mean that if these funds sell out their ringgit bonds, then they may cause foreign exchange instability if they decide to move their funds out of the country.

Secondly, having examined the Balance of Payments data for Malaysia, I think many people assume that we can generate a current account surplus of RM 40 billion a quarter. I think we can only hope to aim for RM 40 billion a year - and even that I think is stretching it.

You can read my earlier thoughts here. I was attacked by many bloggers but now the market has proven me correct.

I think RM 5 to the USD is a very real possibility and is no longer in the fantasy land. Perhaps that may be the catalyst for UMNO Ketua Bahagians and UMNO Chief Ministers to demand an exit for Najib, Zahid and KBAB, so that maybe TSMY or Dato Seri Hishamuddin can take over, investigate the 1MDB fiasco and restore investor confidence.

Until then, we can only watch and see. - http://spin-kings.blogspot.my/