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Friday, 25 May 2018

SGDMYR (Singapore Dollar against Malaysia Ringgit): 25 May 2018, Friday, 12.22pm Singapore Time

SGDMYR Chart 1(Singapore Dollar against Malaysia Ringgit): 
25 May 2018, Friday, 12.22pm Singapore Time
(Click on Technical Chart above to Expand)

Attached above is the Technicals for SGDMYR foreign exchange pairing -- Singapore Dollar against the Malaysia Ringgit. As more and more revelations are laid transparently by the new government in power, the financial markets may soon realise that it had been pricing in the Malaysia Ringgit wrongly for the past 1 to 2 years over-valuing the Ringgit. The SGDMYR has just broken up the black resistance trend line in SGDMYR Technical Chart 1. There was a yellow symmetrical rounding bottom prior to this break-up in SGDMYR, meaning that the move is with high reliability. The yellow symmetrical rounding for the immediate short term move can hence be projected as on chart. The MYR (Ringgit) will be sold off even more for the SGD in the coming weeks and months. As markets had been pricing in the Ringgit wrongly (over-valuation of MYR), the Ringgit has to regress to the mean as follows in SGDMYR Technical Chart 2:

SGDMYR Chart 2 (Singapore Dollar against Malaysian Ringgit): 
25 May 2018, Friday, 12.22pm Singapore Time
(Click on Technical Chart above to Expand)

This would mean a historical low for the Malaysian Ringgit against the Singapore Dollar never ever seen before. The brown trajectory in SGDMYR Technical Chart 2 is the expected long term trajectory following the short term yellow trajectory in SGDMYR Technical Chart 1. The current standard deviation in the SGDMYR is completing now (as illustrated on chart), and a regression to the mean (significant depreciation of MYR) is taking place now. This will bring the SGDMYR to the 3.3500-3.5500 band in exchange rate in the next 1 to 3 years, with a mean of 2 years. 

Side note:
Malaysia exporters and export-oriented companies whose share prices soared to the sky rapidly in the 2014/2015 sharp MYR-depreciation will soar again. Examples include those of rubber, rubber gloves, condoms, etc.

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