All the disruptions....and is Asean in trouble?

There has been quite a lot of disruption this week., and it all started with Covid-19. 

My wife was the first to contract the virus, she started feeling uncomfortable by Monday. but even on Wednesday, her self-test showed negative in the morning. Only when she visited the doctor at 10AM that the ART test showed positive, she ended with MC for 7 days, technically more than a week.

As a result, both my kids were sent to my mother-in-law's place.  I became the bridge to transport whatever necessary between the 2 locations. The need to bring things around is certainly  a tiresome thing to do.

Came Saturday and my son came down with a slight fever, he did a self-test and it was positive. So by afternoon time, I sent to fetch him to prevent as much as possible any spread at my mother-in-law's place. 

So now I am living with 2 positive on Covid-19, still need to transport necessities in between, which explain why I only managed to start my blog at this time of the weekend. I amtired and my eyes are half closed.....

There were a few things that I wanted to type in, including up-dates on Dow, Nikkei and Hang Seng ( apparently Nikkei and Dos has reversed up-ward due to the interest rate hike ), and an afterthought on HKD ( more on China because the continuous bad news on its economy on the ground does not  align with the government's reporting ). 

Nevertheless, I want an entry on Asean. Just few days ago, I came across this travel documentary that interestingly mentioned Thai Baht was on free fall.

Video 1. Thai Baht Situation 

Then yesterday another video talked about the falling of Malaysian Ringgit.

Video 2. Malaysian Ringgit falling

This led me to wonder what happened.

In earlier blogs entry of mine What is USD doing? , GBP and EUR continue with their downslides , What's with USDJPY and where is theading?  and Revisiting USDSGD , I mentioned a general strengthening of USD against other currencies. I wandered if the "weakening of IDR and MYR is due to the same reason.

To check if it is the USD phenomenon, I have to compare them with a different currency, and I have decided to use SGD, currency which country is part of Asean.

I have already mentioned USD strengthening against SGD, if the same applies to IDR and MYR, then we should see side trend for these 2 currencies.

Let's first look at SGDMYR, since Malaysia is my country of origin.

Fig 1 SGDMYR weekly Chart

Straight away, I can say it does not look good on MYR. First of all, a huge hammer formation on 15th May 2022gave an indication of its direction, the correction that followed did not help, forming a flag with support at 21-week moving average. It is going to climb further.

Using Fibonacci projection here, I would say the next level of resistance is MYR3.25474 to MYR 3.32340.

Its local economy has high dependence on foreign imports of raw material, the weakening of MYR made production very costly since transactions are in USD.

Chicken is the most prominent news of Malaysia recently. The chicken farmers whose feeds depend on imports are pressured to increase the price of chicken. To make the voters happy, the government put a price ceiling on chickens. So the chicken farmers tried to increase export to Singapore to manage their margin. This further reduced the number of chicken supply locally. The smart-ass government then banned chicken exports to force chicken farmers to sell their chickens locally.

The moves led to closing down of chicken farms and some owners even said that they are going to drive Grab instead.

It also led to a price hike in chicken in Singapore, the chicken cost up by 30% to 50%. Not only that, it re-directed the Singapore government to buy chicken from Indonesia. If this works out, it will kill all the chicken farmers in Malaysia.

The political situation in the country is not helping, incompetence leadership and weak opposition with focus on power struggle. The people will be the one suffering. 

Let's move on to Thailand. 

Fig 2. SGDTHB Weekly Chart

While Thai Baht is more gentle, just like its culture. Even so, Thai Baht is also weakening. I believe there are 2 major sources of income for Thailand, agriculture and tourism. Tourism might be more important to Thailand than its agriculture products, which many comprise of rice.

It is quite desperate to re-open its country for tourists as the country's economy is really in a bad shape. Recent stability in politics does not help as they might not be competent in improving the economic condition. They used to have a prime minister Taksin who was capable, but his policies eroded the vested interest of the upper class and it is rumored that his popularity over-shadowed the King. They have him removed and destroyed his family.

Again, if I use Fibonacci projection for measurement, Thai Baht will see resistance at THB25.37315 to THB26.3238.

If these 2 countries are on deterioration. Is there any member did not do as bad?

Fig 3. SGDIDR Weekly Chart

The SGDIDR chart is an indication of a pair that is on side trend. For the time being, I do not see weakening of IDR, if any, it might actually be doing much better than others. For some reason, I feel that it will strength against SGD in the short future.

For the moment, I am reluctant to perform any measurement on this pairing due to its side trend behavior. 

My understanding here is that Indonesia has been having 2 succession of good president, focusing on improving the country's wellbeing.