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Ringgit Fluctuations MM2H

Hello
So I was approved for the program and just have to fly back to KL to finalize everything (wire funds etc).

I started this whole process almost year and half ago but b/c of some personal issues was able to get extensions but I showed proof of funds/income etc and was approved

Im younger than 50 so my fixed deposit amount is 300k myr

The malaysian economy has been hit hard during the past few years. My concern now is the fluctuation with the ringgit versus say the dollar (my currency).

Lot of fluctuations in the MYR currency past few years. Argument can be made its  a  fixed deposit and for 10 years but still...in 2 years a near sizeable drop. The malaysian economy is tied to petroleum prices and I dont see a spike up in the foreseeable future...

What is the ringgit outlook?

Ten years is a long time and the rates will most like rise and drop many times. It was £1 = MYR7.4 when I bought my first property in 2004 and I've seen it at £1 = MYR4.6. So it's likely going to change a lot over the next few years. The political situation may also have an impact and every global recession will have an impact, and also allow you to make money on exchange rates.

I tended to just forget about the Fixed Deposit until I cancelled my MM2H although I didn't need to place much money in it. If you have other money then you can use that to play the currency market or look for interesting deals with the local banks to place other Fixed Deposits with reasonably high interest rates. You should also check out all the local banks to see which offers the best interest rates for your MM2H Fixed Deposit as banks often have promotional rates. The standard rate is close to 3%, so good to check out the rates with banks like Maybank, Ambank, Public Bank etc.

As for the Ringgit outlook, I think it will fluctuate considerably now and again as it has done in the past. If you can make money from this then it's good.

Actually I think in the LONG run the ringett will return to a more stable value in the range of RM3.60-3.80 to the US dollar. But until the current situation with the PM and the preception of corruption settles down it's going to be pretty unstable. The rates we're seeing now are close to record levels in terms of the ringitt being devalued (other than very short periods where it went to RM4.45=US1), and it's probably going to go back to under RM4=1USD before too long. Which means moving a large amount of money NOW will make you money IF AND ONLY IF I'M RIGHT. I have nothing to back me up in my estimate (guess) other than watching what has happened in the past (I was here for the 1996-97 crisis as well, and I see some correlations - at that time it was the Anuar/Dr. M issues)

Regardless you have to look at what you have to gain/lose if the Ringitt gains or loses value.

Right now RM300K is equal to USD72,920 as current value of RM4.1122 = USD1.00.

If the ringitt goes to RM5.00 = USD1.00 (which it never has as far as I know) then your RM300K then becomes $60,000, which means you've lost $12,920 in the loss in value of the RM. I would take that as the exterme case since the RM has never gone that low (but it could, we never know the future).

On the other hand if the ringitt goes back to the historical value of RM2.50 = 1 USD (which is what it was at for MANY years before the 1997 crisis) then your RM300K is worth USD120,000, which means you've earned $47,080. Again an exterme case since the ringitt hasn't gone near that value since 1997, almost 20 years.

It was pegged for years at RM3.80, and once allowed to float it drifted down under RM3.00 for quite a while, and in the last couple of years it's moved back to RM4.10-4.20 range for much of the time. Of course using my guess of it returning to about RM3.70, then you'll still have about $81K, which means you'd earned on the exchange rate about $9000. None of these caluclations take into account interest earned (which is higher in Malaysia right now), or lost opportunity costs by having the money outside the stock market.

Anyway you look at it, you're taking on some risk but you also stand to gain as well. I personally wouldn't have an issue worrying about the fluctations in the exchange rate, but I'm optimistic that it would be gain vs a loss.

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