Wednesday, December 7, 2016

ICYMI: Talking FX on BFM

Me, pontificating on the Ringgit and BNM’s new measures, over the past week:

Tuesday, December 6, 2016

FX: Onshore Versus Offshore

Imagine you have a widget to sell, something that helps pick apples. You offer the widget to a bunch of apple farmers, who think, yes, very useful, and offer you a price for it. Then you go to another set of orange growers and offer the same widget, and they’ll say, well we could use it, but its a different shape, and offer you a price half of what you got before (I’m assuming away the ability to arbitrage).

In essence, that’s the problem facing central banks with currencies traded both onshore and offshore – while the product’s the same, the market players are different and you’ll get different prices as a result.

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