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'Money for nothing' - Why report on the ringgit is misleading

COMMENT | Quoting Bloomberg, which in turn relied on the analysis of a financial company, Shroeders, the Malaysian authorities argued that "ringgit Malaysia (RM)" was the strongest among a basket of Asian currencies, including that of Japan and China.

Does the Ministry of Finance, which is also the portfolio of Prime Minister Najib Abdul Razak, even know what it means?

China's currency, i.e. the renminbi, is based on official intervention, especially towards the end of December 2016 and January 2017, since China does not want a cheap currency to give US President Donald Trump the impression that Beijing was lowering its currency value intentionally to corner the global market. Thus, China's renminbi isn't a reflection of the market forces and has never been such a case.

The same applies to Japan, which is why its economy had once produced 'Mr Yen', or Eisuke Sasakibara, whose goal at the Ministry of Finance in the 1990s involved keeping the yen low but stable, so that Japanese exports could become sought-after commodities, especially in the West.

After allegedly blowing US$11 billion away through 1MDB, Malaysia was forced to rationalise the entity, which, among others, involved selling its energy assets and land banks to foreign companies.

When one sells something to repay the interest and the debt is accrued, the international market will applaud.

After all, what once belonged to Malaysia now slips into the hands of others. And, as the period of debt repayment is elongated, as marked by Malaysia's guarantee to repay the International Petroleum Investment Corporation (IPIC) through an arbitration in London, the market will even cheer on.

Good job, good job, Malaysia is repaying its debt obligations, in this case close to more than US$600 million a year until 2023 and beyond. But is Malaysia free from debt yet? No...

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