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GBP or USD versus MYR (Kuala Lumpur)

I got asked this question directly from a member so though I would share it as others may (or may not) find it useful. This is only an opinion! And the members name has been withheld but I would love to hear other peoples opinions.

Hello. I saw your topic discussing the exchange rate between GBP/MYR. I usually care about USD/MYR more but I think if one is on the raise, other goes up as well. USD/MYR now is 4.12 and I honestly dont know how high will it reach. One thing clear is the Malaysian does not give a damn about how bad the money perform.

So the question is: Should I buy in USD now or wait for a while til MYR get stable again? Thanks in advance.

Hi, Personally I see USD getting stronger in the short term simply because there is a rate hike coming on base rates. Probably as soon as September. It is typical that a currency strengthens prior to a rate hike but generally gets sold off after the event. “Buy the rumour, sell the fact” So I would suggest you do consider USD as I see room for further movement in the shorter term. I don't see the Bank of Negara attempting to “peg” the currency again as they did in '98. Further. if the PM continues to hold power here and not step down then the economy will continue to bottom out as we have seen an absolute flood of foreign investors exit the markets here. So not only do you have a strengthening dollar but you have a weakening MYR. Its the worst performing currency across Asia. And even further, to compound the issue even more, oil which makes up over 60% of exports from here is also causing a weaker economy. West Tex a barrel (currently $41) will probably drop even further now that the sanctions have been lifted from Iran by the US. As Iran is an OPEC member they will start freely producing oil to add to the already over production that is occurring. What that translates as is a lower barrel price. Join the dots and you'll get the picture. As with anything, there is always risk involved and this is not advice that I am offering but an opinion. Albeit quite a strong case I would suggest and i did actually state the same when the exchange rate was GBP/MYR 5.95. In short, personally I have bought GBP and I hold USD and will wait before selling back to MYR. I hope this is informative enough for you to make a decision. 4.50 is the target. It depends how much you have to convert as well. These are all factors you have to consider and how you are converting it. As you will not get the mid rate at a money exchanger. Please let me know your thoughts on my opinion. Feed back is always welcomed. Regards. Lawrence.

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