Thursday, December 1, 2016

Effective Exchange Rate Indexes: November 2016 Update

The NEER and REER page has been updated.


Since there’s a lot of interest in exchange rate movements this past few weeks, I’ve accelerated the timetable for this month. As expected, we’re seeing broad based declines across all the indexes, with the nominal broad index falling -2.03% in November, and -2.11% in real terms, compared to –0.61% and –0.79% in October. On a yoy basis though, the Ringgit has dropped just –0.74% in nominal terms and is actually up 0.08% in real terms. Across the currency components, the sharpest drops were recorded against the USD, GBP and HKD (no surprise, since the HKD is on a currency board with the USD), and MYR falls were recorded against every component currency with the exception of the JPY, which saw a 0.7% increase.



  1. Indexes have been updated to November 2016
  2. CPI deflators and forecasts have been updated for October/November 2016
  3. Trade weights have been updated for the 2Q2016 and the 3Q2016. This caused revisions to the indexes from April 2016 onwards

Wednesday, November 23, 2016

Effective Exchange Rate Indexes: October 2016 Update

The NEER and REER page has been updated.


Since the last update in August, both broad indexes have slowly declined, and are now close to revisiting last year’s lows, at least as of the cut-off date (October 2016). The declines have been broad based since April, against all currencies with the exception of the GBP (still +8% since April). I’m expecting to see a further decline in November.



  1. Indexes have been updated to October 2016
  2. CPI deflators and forecasts have been updated for September/October 2016

Tuesday, November 22, 2016

The Ringgit and 1MDB

I’m still hearing people talking about the 1MDB effect on the Ringgit. Here’s what I’ve worked out:


Monday, November 14, 2016

4 Thoughts for the Week

GDP Report

Surprisingly strong at 4.3% yoy…or may be not. Iwas expecting a pickup as we had the minimum wage revision, civil service pay revision, cut in the OPR and cut in the EPF contribution rate. The end result was a 6% (qoq SAAR), which is the best quarterly growth rate since 4Q2014. I haven’t delved into the details yet (the bond market tantrum is occupying my working hour attention at the moment), but apparently there was a pretty decent growth contribution from external trade as well.

Thursday, October 27, 2016

ICYMI: Malaysia’s Pension Crisis

My latest (excerpt):

Challenges of a pension system

ONE aspect of an ageing society is obvious to everyone – care for the elderly will take on greater importance. How adequate are Malaysia’s pension systems?

In western societies, most countries have achieved universal coverage, with net income replacement values ranging from 29% in the United Kingdom, to 96% in the Netherlands (based on OECD data)….

…The challenge in these western economies is one of sustainability. The problem with DB schemes is that they are based on the principle of pay-go – current workers’ contributions pay for the pension entitlements of retirees. This is not an issue if the demographic profile of the country is relatively stable...

Click the link for the rest.

Tuesday, October 25, 2016

Assessing Budget 2017

Today’s the first chance I’ve had to sit down and really think about the budget, past the first impressions we all got on Friday.

Overall, it somewhat exceeded my expectations. Granted, my expectations were undemandingly low, which is what happens when you commit to a hard limit on public debt and promise to cut spending over the medium term. But within those constraints, there was still some nice ideas in the budget speech.

Friday, October 21, 2016

Budget 2017: Going Live

…but not in the usual way. I’ll be running around like a headless chicken for most of today (apologies to all headless chickens, by the way), so live bloggin the budget as I’ve done over the last few years won’t be possible.

However, I’ll try to put something up when the budget speech ends, and more importantly, you can catch me on NTV7’s post-budget show at 8pm.

Further analysis by next week (the weekend’s going to be pretty hectic too).

Thursday, October 20, 2016

Alternative Budget 2017

It’s that time of the year again!

I’m not going to comment extensively about the Alternative Budget (you can download it here), especially on the numbers. I’ve already spotted one whopper of an error, and another biggie that can be put down to lack of info (more on this later). Given the assymmetry in information between government and opposition, I’m not going to be too critical over these.

Rather I want to touch on the broad themes raised in the document. As an aside, I’d also note that mainstream media coverage on the Alternative Budget is far more widespread than it used to be. There was a time when barely anyone wrote about it.

Wednesday, October 5, 2016

Explaining Inflation…Again

I had some input into an article the Malay Mail published last month:

Is there really a gap between the official inflation rate and reality? Well, yes and no

KUALA LUMPUR, Sept 5 — As Malaysia’s urbanites begin to feel the bite of soaring living costs, there is growing suspicion that the official inflation rate does not quite reflect the economic reality….

…So is there a gap between real consumer experience and official data? The explanation itself is quite technical but in short, it’s a yes and no.

On one hand, economists worldwide have long decried the method used to measure inflation—the consumer price index (CPI) — saying it is far from reliable.

Domestically, there have been debates about whether or not the CPI model accurately depicts the reality on the ground....

They only used some of my reply (because, as usual, it was long-winded), so I thought I might take the liberty of publishing my remarks in full:

The Population Bubble

Came across this tweet this morning:

How very true.

Wednesday, September 28, 2016

ICYMI: Growth and Ageing on BFM

I was on BFM this morning talking about growth in the long run:


Monday, September 26, 2016

Demand For Housing

My latest column in the Star (excerpt):

Danger of dip in demand lurks

RECENTLY, the Urban Wellbeing, Housing and Local Government Ministry proposed allowing housing developers to extend loans to homebuyers. One common refrain in support of this policy and for house buying in general is that “house prices only go up”.

In one sense, this is rational. Land is the biggest single input into house prices and land isn’t being made anymore (bar the occasional land reclamation or undersea volcano eruption). Global warming is raising sea levels, which reduces available land even further. But this is entirely a supply side argument.

Historically, there have been periods where house prices have not gone up or even gone into retreat. There is nothing inherently special about the housing market in that respect. The global financial crisis was partly triggered by a US housing bubble that burst, as house prices fell over 20% from their peak in 2007 and took eight years to recover.