Tuesday 22 November 2016

Bank Negara Malaysia. Trapped

Is the massive 1985 hit for Colonel Abrams.
Likewise, Bank Negara Malaysia, seems to have "TRAPPED" itself into a corner today.
The central bank knows it must bite the bitter pill and cut interest rates today.
But all 18 analyst polled by Bloomberg yesterday, expect Bank Negara Malaysia to do "NOTHING".
Part of the reason is because Malaysian financial institutions could be the worst affected by a slide against the US Dollar, which stands at RM4.42.
With fund managers now saying the probability of the US Federal Reserve hiking lending rates next month, Bank Negara Malaysia is caught in a catch 22 situation.
Cut interest rates, and see the value of the Ringgit slide, knowing that Malaysian banks are the biggest issuers of short-term dollar debt, with more than US$3.5 billion of bonds due in less than a year outstanding.
Don't cut interest rates now, and you close the door to reinvigorate the manufacturing sector.
What the central bank to today, will gives us all an insight, if our bankers are long or short sighted.