Ringgit Malaysia PEG against US Dollar abandoned

***
I was having teh-tarik outside and when i came back 10minutes ago, SUPRISE!
***

I went to PPS and discovered several blogs mentioning the re-peg.
Immediately went to TheStar for confirmation but it was down.
Went to CNN but apparently the big news was the new London bombing incident.
Went to TheEdgeDaily and got my news there.
Then instinctively went to Jeff Ooi to read more.
He never fails to update. Very fast. Well done Jeff.

Ok what does it mean? This blog is on Bursa Malaysia(formerly known as KLSE) so i will keep my 2cents related it(Bursa Malaysia).

Long time ago when the US dollar was volatile and weak, our then Prime Minister cum Finance Minister numero uno declared 1USD = 3.80RM

The peg served well until recently when US Dollar weakened substancially against major currency in the world(but gained strength for the past few weeks)

So 1uSD is not worth 3.80RM anymore.
Our Ringgit gained strength.
1USD is probably worth 3.50RM now.

With the PEG now removed, foreign funds will look for the opportunity to exit our market after the huge in-flow of funds on expectation of de-pegging.

Look at it this way.
Watermelon = US
Ciku = RM

We have 2 Watermelons with us. Our aim to have more watermelons.

Previously 1 Watermelon is worth 5 cikus.
So you exchanged 2 watermelons for 10 cikus.

Now, 1 Watermelon is worth 3 cikus.
Remember you have 10 cikus with you.

1o cikus = 3 Watermelons

Profit of 1 watermelon!

In real life we are talking about millions of Ringgit here.

Hopefully those funds are not too eager to leave. Or else it will be a free-fall for the market today.

Another view is more hot-money will come in , as the appreciation of the Ringgit is gradual and almost definite. Profit is almost guaranteed in due time.

Let's look at our market yesterday.

For Wednesday 22nd July 2005 Session

Composite: 921.94 (-2.07) -0.22%
Emas: 211.05 (-0.46) -0.22%
Industrial: 2039.09 (-2.74) -0.13%
2nd Board: 91.37 (-0.87) -0.94%


Volume: 4132698 lots
Gainers: 235
Losers: 613
Unchanged: 287


Market Talk
Market did not rally as many expected. This is the market telling us traders :

"Do NOT predict us. We are like woman. Unpredictable."

Heh, sorry for the gender bias. Irresistable :)

Traders were quick to realise profit from Wednesday's session resulting in today's negative session.

Second Board continued to fall, seems like punters and the big boys are not paying too much attention at it for now.

All that being said, the uptrend is still intact as there are no reversal-signals(technically speaking : candlestick method).

My prediction(!) is market will either swing up wildly tomorrow or stay neutral(undecisive traders)
The so-called hot-money came in and waited for months.
What is another few more weeks to wait for the Ringgit to appreciate to a more comfortable level?