1 00:00:00,009 --> 00:00:02,328 Speaker 1: You're listening to a CNA podcast. 2 00:00:04,730 --> 00:00:09,079 Speaker 1: Welcome back to the Money Talks podcast. Confession Time. How 3 00:00:09,090 --> 00:00:12,069 Speaker 1: many of us were tempted to rush down to the 4 00:00:12,079 --> 00:00:15,319 Speaker 1: nearest money changer? The moment we found out that the 5 00:00:15,329 --> 00:00:19,299 Speaker 1: Malaysian currency had hit a high of 3.4 against the 6 00:00:19,309 --> 00:00:22,040 Speaker 1: Singapore dollar. I have to tell you that 7 00:00:22,385 --> 00:00:25,354 Speaker 1: was very real for me because like many Singaporeans, I 8 00:00:25,364 --> 00:00:29,674 Speaker 1: love a little joint in JB. Could drive to Malacca 9 00:00:29,684 --> 00:00:32,854 Speaker 1: maybe even hit up K L. What's not to love 10 00:00:32,865 --> 00:00:36,894 Speaker 1: about the Malaysian food and all the shopping? Not forgetting 11 00:00:36,904 --> 00:00:39,205 Speaker 1: the massages? I mean, when you convert that money, 12 00:00:39,639 --> 00:00:41,569 Speaker 1: it is just that much sweeter when you get more 13 00:00:41,580 --> 00:00:44,790 Speaker 1: bang for buck. Well, for your Singapore buck at least. 14 00:00:45,080 --> 00:00:47,889 Speaker 1: So in this episode, we wanted to get a little 15 00:00:47,900 --> 00:00:52,810 Speaker 1: crash course on currency fluctuations and how it can help 16 00:00:52,819 --> 00:00:57,029 Speaker 1: or even hinder us. And if we can even make 17 00:00:57,040 --> 00:01:01,389 Speaker 1: money off of these so-called lucrative rates to unpack it 18 00:01:01,400 --> 00:01:04,989 Speaker 1: all I have with me. Anya Rodriguez, she's a research 19 00:01:05,000 --> 00:01:07,470 Speaker 1: analyst at Value Champion. Hey, welcome to. 20 00:01:08,203 --> 00:01:11,913 Speaker 1: Hi, lovely to be here. Ok. So let's start with 21 00:01:11,922 --> 00:01:15,672 Speaker 1: what happened. We saw all that's happened in the currency markets, 22 00:01:15,682 --> 00:01:21,102 Speaker 1: latest search, I mean 3.4. That's mind blowing. This is 23 00:01:21,112 --> 00:01:26,042 Speaker 1: up 4.15%. I did the math uh since the year began. 24 00:01:26,263 --> 00:01:29,053 Speaker 1: Can this go even higher? You think? Can we look 25 00:01:29,063 --> 00:01:32,462 Speaker 1: at 3.63 point seven? 26 00:01:32,472 --> 00:01:35,241 Speaker 2: So obviously I'm not able to predict where the, 27 00:01:35,515 --> 00:01:39,554 Speaker 2: the exchange is going to go. But from MA S standpoint, 28 00:01:39,566 --> 00:01:43,716 Speaker 2: how we fix our currency exchanges is usually through a 29 00:01:43,725 --> 00:01:49,255 Speaker 2: policy called Sneer, the Singapore dollar nominal effective exchange rate. 30 00:01:49,356 --> 00:01:52,155 Speaker 2: So unless MA S changes, that I'm not really able 31 00:01:52,166 --> 00:01:54,706 Speaker 2: to say what's happening on the Malaysian side, whether the 32 00:01:54,716 --> 00:01:58,996 Speaker 2: exchange rates will change. But you never know with inflation changing. 33 00:01:59,005 --> 00:02:03,036 Speaker 2: And like Malaysia's domestic economy changing, there's always a chance 34 00:02:03,045 --> 00:02:03,375 Speaker 2: that 35 00:02:03,589 --> 00:02:06,239 Speaker 2: exchange rates will keep fluctuating and we will keep seeing 36 00:02:06,250 --> 00:02:10,570 Speaker 2: that amazing Singapore to Malaysia ring exchange. Do 37 00:02:10,580 --> 00:02:12,869 Speaker 1: you go to Malaysia often? I mean, now that we 38 00:02:12,880 --> 00:02:15,300 Speaker 1: have this really advantageous currency exchange, 39 00:02:15,529 --> 00:02:18,198 Speaker 2: not as often as I would like probably, you know, 40 00:02:19,130 --> 00:02:23,320 Speaker 2: maybe beginning of the year went to JB for the day, 41 00:02:23,330 --> 00:02:26,520 Speaker 2: you know, do your hair, do your nails, classic. 42 00:02:27,419 --> 00:02:29,649 Speaker 1: I mean, why not? Right? OK. So like as I 43 00:02:29,660 --> 00:02:33,669 Speaker 1: said earlier, I went to rush out exchange my dollars 44 00:02:33,679 --> 00:02:35,740 Speaker 1: for the ring. It is this a good move though? 45 00:02:35,750 --> 00:02:40,539 Speaker 1: Should I be the typical Singaporean? The moment the exchange 46 00:02:40,550 --> 00:02:43,489 Speaker 1: rate hits a high again, I should change as much 47 00:02:43,500 --> 00:02:45,130 Speaker 1: as possible. Should I be doing that? 48 00:02:45,380 --> 00:02:47,339 Speaker 2: I mean, you're never going to be able to predict 49 00:02:47,350 --> 00:02:49,320 Speaker 2: what's going to happen. But if you're comfortable with the 50 00:02:49,330 --> 00:02:51,889 Speaker 2: current exchange rate, why not? Right. Like if you think 51 00:02:51,899 --> 00:02:53,668 Speaker 2: that you're getting a good bargain, go for it, 52 00:02:53,919 --> 00:02:56,630 Speaker 2: the thing is that how much more it can change 53 00:02:56,639 --> 00:03:01,210 Speaker 2: is probably not that great. So, if you are happy 54 00:03:01,220 --> 00:03:04,360 Speaker 2: with what it is now, then just change your money now, 55 00:03:04,369 --> 00:03:04,770 Speaker 2: I guess. 56 00:03:05,710 --> 00:03:08,570 Speaker 1: Are there rules that I need to be aware of? 57 00:03:08,580 --> 00:03:13,149 Speaker 1: For example, money changers, they have set amounts that they're 58 00:03:13,160 --> 00:03:16,520 Speaker 1: allowed to change before they are so called sold out? Right. 59 00:03:16,669 --> 00:03:20,109 Speaker 1: So are there these kinds of unwritten rules that I 60 00:03:20,119 --> 00:03:23,429 Speaker 1: need to be aware of when I'm exchanging my sing dollars? 61 00:03:23,520 --> 00:03:23,550 Speaker 1: I 62 00:03:23,559 --> 00:03:26,570 Speaker 2: think because as a personal consumer, 63 00:03:26,656 --> 00:03:29,166 Speaker 2: the amount that we're changing is so little, we don't 64 00:03:29,175 --> 00:03:31,826 Speaker 2: really have to consider like what these money changers will 65 00:03:31,835 --> 00:03:35,626 Speaker 2: have to consider on their scale of changing money. So 66 00:03:35,656 --> 00:03:38,996 Speaker 2: if you're concerned about exchange rates always fluctuating. The other 67 00:03:39,005 --> 00:03:41,216 Speaker 2: thing that you can also think about is maybe if 68 00:03:41,225 --> 00:03:43,365 Speaker 2: you have things like you trip or revolut and 69 00:03:43,376 --> 00:03:46,865 Speaker 1: those are the multi currency cards. Yes, exactly. 70 00:03:47,276 --> 00:03:47,526 Speaker 2: So 71 00:03:47,611 --> 00:03:49,511 Speaker 2: instead of having to rush down to that money changer 72 00:03:49,522 --> 00:03:51,281 Speaker 2: every single time you want to lock in that good 73 00:03:51,292 --> 00:03:54,182 Speaker 2: exchange rate, you can always do it virtually as well 74 00:03:54,322 --> 00:03:57,242 Speaker 2: and then you can do it in smaller amounts more frequently. 75 00:03:57,251 --> 00:03:57,572 Speaker 2: And as, 76 00:03:57,582 --> 00:03:59,352 Speaker 1: and when you're comfortable, you can do more you can 77 00:03:59,361 --> 00:04:01,582 Speaker 1: do less at any given time. Actually, we did have 78 00:04:01,591 --> 00:04:04,091 Speaker 1: an episode about multi currency cards and it's like stored 79 00:04:04,102 --> 00:04:07,601 Speaker 1: value almost right when you have a digital wallet where 80 00:04:07,611 --> 00:04:10,501 Speaker 1: you can store a different currency at the time, 81 00:04:10,979 --> 00:04:13,970 Speaker 1: because the sing dollar is that much stronger. Right. How 82 00:04:13,979 --> 00:04:16,019 Speaker 1: much would you recommend? I do, 83 00:04:16,059 --> 00:04:19,099 Speaker 2: I personally don't change more than a few 100 at 84 00:04:19,109 --> 00:04:21,329 Speaker 2: a time unless I know I'm like stocking up for 85 00:04:21,339 --> 00:04:23,959 Speaker 2: a big trip that I'm going for. Yeah, because I'd 86 00:04:23,970 --> 00:04:25,980 Speaker 2: rather not have all of my money tied up in 87 00:04:25,988 --> 00:04:27,928 Speaker 2: foreign currency in the first place. Smart 88 00:04:27,940 --> 00:04:31,349 Speaker 1: move, smart move and on that note, right. Can you 89 00:04:31,359 --> 00:04:33,670 Speaker 1: please please explain to me 90 00:04:34,049 --> 00:04:38,820 Speaker 1: why currencies fluctuate so much? I mean, is this something 91 00:04:38,829 --> 00:04:41,850 Speaker 1: that is specific to the current economic conditions? Because we 92 00:04:41,859 --> 00:04:44,049 Speaker 1: have high inflation, high interest rates, things are a bit 93 00:04:44,059 --> 00:04:48,260 Speaker 1: haywire or is this something that is pretty typical? 94 00:04:48,779 --> 00:04:52,510 Speaker 2: So currencies will always fluctuate for many different reasons, but 95 00:04:52,519 --> 00:04:55,500 Speaker 2: primarily it all boils down to supply and demand of 96 00:04:55,510 --> 00:04:58,130 Speaker 2: your currency at the end of the day. Right? So 97 00:04:58,140 --> 00:05:00,609 Speaker 2: if there's more supply, then the prices will come down 98 00:05:01,040 --> 00:05:03,660 Speaker 2: and that can be dependent on many different things. Of course, 99 00:05:03,670 --> 00:05:05,570 Speaker 2: demand the same way it works with demand. 100 00:05:05,920 --> 00:05:08,928 Speaker 2: So if you export goods or if you sell things 101 00:05:08,940 --> 00:05:11,700 Speaker 2: like your domestic goods in the foreign market, people will 102 00:05:11,709 --> 00:05:14,719 Speaker 2: have to buy it in your home currency. So that 103 00:05:14,730 --> 00:05:17,920 Speaker 2: will increase the demand for your currency and that can 104 00:05:17,928 --> 00:05:21,130 Speaker 2: be all sorts of different things. For example, even if 105 00:05:21,140 --> 00:05:23,359 Speaker 2: you want to invest in foreign assets, you have to 106 00:05:23,369 --> 00:05:25,609 Speaker 2: do it in that foreign currency. So that will increase 107 00:05:25,619 --> 00:05:28,928 Speaker 2: the demand for that currency as well. Yes, mainly to 108 00:05:28,940 --> 00:05:31,190 Speaker 2: do with demand and supply. So, of course, 109 00:05:31,285 --> 00:05:35,484 Speaker 2: right now we're experiencing high levels of inflation. So then 110 00:05:35,494 --> 00:05:39,255 Speaker 2: some countries are experiencing higher levels of inflation than others. 111 00:05:39,265 --> 00:05:42,613 Speaker 2: And so some countries currency will be affected by that 112 00:05:42,625 --> 00:05:44,885 Speaker 2: more so than others. And that in turn will also 113 00:05:44,894 --> 00:05:48,493 Speaker 2: cause foreign investors to think of your currency to be 114 00:05:48,505 --> 00:05:52,674 Speaker 2: more of a safe haven. I see. Yes. So for example, 115 00:05:52,684 --> 00:05:55,174 Speaker 2: in the region, our currency is fluctuating a little bit 116 00:05:55,184 --> 00:05:56,553 Speaker 2: less than some of maybe the other 117 00:05:56,649 --> 00:05:59,950 Speaker 2: Southeast Asian currencies. So that can cause investors in the 118 00:05:59,959 --> 00:06:02,540 Speaker 2: region to maybe want to buy into Singapore asset. 119 00:06:02,609 --> 00:06:07,000 Speaker 1: Oh, so actually the strongest sing dollar is attractive to investors, 120 00:06:07,010 --> 00:06:07,618 Speaker 1: especially 121 00:06:07,630 --> 00:06:10,500 Speaker 2: if your dollar fluctuates less because then you have less 122 00:06:10,510 --> 00:06:12,709 Speaker 2: risk involved in because they're 123 00:06:12,720 --> 00:06:17,039 Speaker 1: seeing. Oh, that's pretty, there's a pretty good level of stability. 124 00:06:17,190 --> 00:06:19,559 Speaker 1: It doesn't swing a lot. I'm going to put my 125 00:06:19,570 --> 00:06:21,919 Speaker 1: money in this place. Yes. Ok. But doesn't that 126 00:06:22,015 --> 00:06:24,484 Speaker 1: mean though when it comes to imports and exports, if 127 00:06:24,494 --> 00:06:27,265 Speaker 1: my memory tells me correctly, a stronger sing dollar means 128 00:06:27,274 --> 00:06:31,295 Speaker 1: your exports are going to be more expensive. Wouldn't that 129 00:06:31,303 --> 00:06:33,893 Speaker 1: dampen demand then? Because if your exports are going to 130 00:06:33,904 --> 00:06:36,755 Speaker 1: be expensive, whether or not the buyer is going to 131 00:06:36,765 --> 00:06:39,105 Speaker 1: be able to afford, it comes into question. Right. Yes, 132 00:06:39,113 --> 00:06:42,635 Speaker 2: definitely. So actually, MA S does have like a goal 133 00:06:42,644 --> 00:06:44,785 Speaker 2: for the ex Singapore dollar and their goal is to 134 00:06:44,795 --> 00:06:47,274 Speaker 2: slowly and gradually appreciate the Singapore 135 00:06:47,380 --> 00:06:50,230 Speaker 2: dollar. And what you said is definitely true with the whole, 136 00:06:50,238 --> 00:06:52,829 Speaker 2: like if your currency is stronger, your exports are now 137 00:06:52,839 --> 00:06:56,540 Speaker 2: more expensive. But in Singapore's case, because we import a 138 00:06:56,549 --> 00:07:00,450 Speaker 2: lot of our materials to our factors of production as well. 139 00:07:00,579 --> 00:07:03,178 Speaker 2: So our imports will now be cheaper with the stronger dollar. 140 00:07:03,190 --> 00:07:03,419 Speaker 2: So we 141 00:07:03,428 --> 00:07:06,380 Speaker 1: make more money. That's nice to know. Yes. And 142 00:07:06,390 --> 00:07:10,309 Speaker 2: also because we are considered to have very high value exports, 143 00:07:10,320 --> 00:07:12,649 Speaker 1: also the perception of expensive exports from Singapore 144 00:07:12,815 --> 00:07:13,635 Speaker 1: already exist. 145 00:07:13,644 --> 00:07:16,304 Speaker 2: Exactly. So our exports are not as sensitive to high 146 00:07:16,315 --> 00:07:18,755 Speaker 2: exchange rates compared to maybe some other country. 147 00:07:18,765 --> 00:07:22,054 Speaker 1: That's fascinating. Ok, so obviously we all know what the 148 00:07:22,065 --> 00:07:24,954 Speaker 1: M E s has done in order to curb inflation. 149 00:07:24,964 --> 00:07:27,684 Speaker 1: It's an unconventional method that is near, right. Well, we 150 00:07:27,695 --> 00:07:30,565 Speaker 1: know the impact on the economy as you've just explained. 151 00:07:30,755 --> 00:07:33,674 Speaker 1: But what impact does it have on the Singaporean people? 152 00:07:33,684 --> 00:07:37,315 Speaker 1: How do we benefit or not benefit from a stronger 153 00:07:37,325 --> 00:07:38,054 Speaker 1: Singapore dollar? 154 00:07:38,510 --> 00:07:40,980 Speaker 2: Well, of course, the most direct thing is now your 155 00:07:40,989 --> 00:07:45,269 Speaker 2: online shopping is also much cheaper, right? Yes. So if 156 00:07:45,279 --> 00:07:48,820 Speaker 2: anything that we're consuming that is denominated in foreign currencies 157 00:07:48,829 --> 00:07:51,799 Speaker 2: will now be considered as cheaper to us. So that 158 00:07:51,809 --> 00:07:54,429 Speaker 2: can be your vacations, that can be your online shopping. 159 00:07:54,549 --> 00:07:57,119 Speaker 2: And also the main reason why the MA S has 160 00:07:57,130 --> 00:08:00,519 Speaker 2: been trying to appreciate the Singapore dollar is purely because 161 00:08:00,529 --> 00:08:03,679 Speaker 2: our inflation tends to be imported since we import everything. 162 00:08:03,899 --> 00:08:05,040 Speaker 2: So that also means that 163 00:08:05,200 --> 00:08:08,190 Speaker 2: for us, the idea is that now at home, we 164 00:08:08,200 --> 00:08:11,850 Speaker 2: will also experience a little bit dampen effects of inflation. 165 00:08:11,859 --> 00:08:14,670 Speaker 2: But then the idea is also that without this appreciation 166 00:08:14,679 --> 00:08:17,709 Speaker 2: of exchange rates, we might be paying even more domestically 167 00:08:17,720 --> 00:08:21,410 Speaker 2: because then now imported goods will be even more expensive. 168 00:08:21,420 --> 00:08:25,970 Speaker 1: So it is pretty important to keep that sing dollar 169 00:08:26,399 --> 00:08:30,369 Speaker 1: a float. Yes, for a considerable length of time. 170 00:08:30,380 --> 00:08:34,460 Speaker 2: Yeah, at least for us as consumers definitely to our benefit. 171 00:08:34,469 --> 00:08:36,159 Speaker 1: Ok. Ok. That's good news. 172 00:08:39,320 --> 00:08:41,369 Speaker 1: There was a time in the middle of last year 173 00:08:41,380 --> 00:08:44,049 Speaker 1: when it seemed that the China we're familiar with was 174 00:08:44,059 --> 00:08:47,500 Speaker 1: a completely different place when the rest of the world 175 00:08:47,510 --> 00:08:52,030 Speaker 1: moved on from the COVID-19 pandemic. As many as 300 176 00:08:52,039 --> 00:08:56,429 Speaker 1: million Chinese people were under some form of a mandatory lockdown. 177 00:09:00,630 --> 00:09:03,169 Speaker 1: There were only two things on my mind to find 178 00:09:03,179 --> 00:09:05,299 Speaker 1: food and to not go crazy. 179 00:09:06,429 --> 00:09:10,250 Speaker 1: Then suddenly the people decided to take things into their 180 00:09:10,260 --> 00:09:11,359 Speaker 1: own hands 181 00:09:13,419 --> 00:09:16,929 Speaker 1: for the first time in more than 30 years, protests 182 00:09:16,940 --> 00:09:21,789 Speaker 1: swept through China and just like that cove ended. 183 00:09:23,179 --> 00:09:26,020 Speaker 1: Join me, we do for a look back at the 184 00:09:26,030 --> 00:09:29,780 Speaker 1: extraordinary year in China and hear how it might have 185 00:09:29,789 --> 00:09:32,309 Speaker 1: changed the country for good 186 00:09:33,500 --> 00:09:38,039 Speaker 1: Red Wall inside China's Zero COVID World A two part 187 00:09:38,049 --> 00:09:41,809 Speaker 1: podcast series by C N A. It's available now on 188 00:09:41,820 --> 00:09:45,570 Speaker 1: the C N A and me, listen, apps, Spotify, Apple 189 00:09:45,580 --> 00:09:47,090 Speaker 1: and Google podcasts. 190 00:09:49,309 --> 00:09:53,099 Speaker 1: Let's now talk a little bit about tips on handling 191 00:09:53,109 --> 00:09:54,260 Speaker 1: cash if 192 00:09:54,270 --> 00:09:56,150 Speaker 2: you're thinking about holding cash. One thing that I thought 193 00:09:56,159 --> 00:09:58,218 Speaker 2: was a bit interesting is that now a lot of 194 00:09:58,229 --> 00:10:01,799 Speaker 2: banks are offering foreign denominated fixed deposit and the interest 195 00:10:01,809 --> 00:10:04,229 Speaker 2: rates on those look so much more attractive than Singapore 196 00:10:04,239 --> 00:10:07,079 Speaker 2: denominated fixed deposits. The reason that they're giving you this 197 00:10:07,090 --> 00:10:10,539 Speaker 2: better interest rates is because you are taking on the 198 00:10:10,549 --> 00:10:13,280 Speaker 2: currency risk, right? You don't know which way the currency 199 00:10:13,289 --> 00:10:15,630 Speaker 2: is going to fluctuate. So maybe that's something you want 200 00:10:15,640 --> 00:10:16,969 Speaker 2: to consider if you are a little bit more of 201 00:10:16,979 --> 00:10:19,000 Speaker 2: a conservative investor. But 202 00:10:19,265 --> 00:10:22,656 Speaker 2: some foreign currency exposure, you can also think about foreign 203 00:10:22,666 --> 00:10:28,015 Speaker 2: currency fixed deposits. But again, you have to understand if 204 00:10:28,026 --> 00:10:31,265 Speaker 2: the foreign currency depreciates against the same dollar, then you're 205 00:10:31,276 --> 00:10:33,785 Speaker 2: not getting that full return because you have to account 206 00:10:33,796 --> 00:10:35,276 Speaker 2: for the loss in the currency exchange. 207 00:10:35,285 --> 00:10:38,074 Speaker 1: This naturally means that things are going to be expensive 208 00:10:38,085 --> 00:10:42,796 Speaker 1: for tourists visiting us just thinking about the Malaysian people 209 00:10:42,806 --> 00:10:47,276 Speaker 1: who live and work here. Suddenly their cost of living 210 00:10:47,285 --> 00:10:49,055 Speaker 1: increases as well because 211 00:10:49,221 --> 00:10:51,611 Speaker 1: yes, they are earning in sing dollar, but they're also 212 00:10:51,622 --> 00:10:55,312 Speaker 1: paying higher because of that stronger Sing dollar. So I 213 00:10:55,322 --> 00:10:58,302 Speaker 1: guess it's a higher in but it's also a higher out. 214 00:10:58,312 --> 00:11:01,151 Speaker 2: Well, I guess for Malaysians who are working and living 215 00:11:01,160 --> 00:11:04,601 Speaker 2: in Singapore to them, the majority of their lifestyles already 216 00:11:04,611 --> 00:11:07,992 Speaker 2: denominated in Singapore dollar. They don't see that difference. But 217 00:11:08,002 --> 00:11:10,671 Speaker 2: now if they send money back home, that's a huge 218 00:11:10,682 --> 00:11:13,831 Speaker 2: difference to them. Yeah. So, I think more so this 219 00:11:13,841 --> 00:11:16,202 Speaker 2: will affect people who are crossing the border every day, 220 00:11:16,211 --> 00:11:19,091 Speaker 2: who are living in Ring and now have to spend 221 00:11:19,380 --> 00:11:21,140 Speaker 2: daily in Singapore. That's 222 00:11:21,150 --> 00:11:24,070 Speaker 1: painful. Ok. But what about the tourists? Do you think 223 00:11:24,080 --> 00:11:26,468 Speaker 1: that the stronger Singapore dollar means that 224 00:11:26,809 --> 00:11:29,950 Speaker 1: tourists are going to think twice about coming to Singapore 225 00:11:29,960 --> 00:11:32,799 Speaker 1: for a visit? Because things are just that much more expensive. 226 00:11:32,809 --> 00:11:35,570 Speaker 2: I think it will definitely be a factor. But from 227 00:11:35,580 --> 00:11:38,070 Speaker 2: my understanding, we do tend to attract a lot of 228 00:11:38,080 --> 00:11:41,820 Speaker 2: like higher net worth tourists. You know, people come to Singapore, 229 00:11:41,830 --> 00:11:46,710 Speaker 2: come to orchard road like that's what they think. So 230 00:11:46,719 --> 00:11:49,309 Speaker 2: maybe to this level of tourists, they're not going to 231 00:11:49,320 --> 00:11:51,419 Speaker 2: feel the impact of exchange rates as much. 232 00:11:51,530 --> 00:11:55,380 Speaker 1: Ok. Yeah. Ok. But what about the mid income tourists? 233 00:11:55,390 --> 00:11:56,439 Speaker 1: They might feel the pinch a 234 00:11:56,450 --> 00:11:58,819 Speaker 2: little bit more. I think so. And also even as 235 00:11:58,830 --> 00:12:01,340 Speaker 2: you and I can tell things just generally, even in 236 00:12:01,349 --> 00:12:04,190 Speaker 2: sing dollar are getting more expensive in Sing dollar. So 237 00:12:04,200 --> 00:12:07,179 Speaker 2: then to have that be compounded with the Singapore dollar 238 00:12:07,190 --> 00:12:10,869 Speaker 2: being even more expensive relative to their home currency. That 239 00:12:10,880 --> 00:12:13,340 Speaker 2: will definitely, they can definitely feel the pinch Ok, 240 00:12:13,349 --> 00:12:16,159 Speaker 1: so the stronger sing dollar, 241 00:12:16,770 --> 00:12:21,289 Speaker 1: I see it as benefiting us when we're spending in 242 00:12:21,299 --> 00:12:26,358 Speaker 1: Southeast Asia, for example, even, I guess even Australia, you 243 00:12:26,369 --> 00:12:28,479 Speaker 1: could consider it. I mean, the last I checked it 244 00:12:28,489 --> 00:12:32,789 Speaker 1: was 1 to 1.1. I'll take that does the strong 245 00:12:32,799 --> 00:12:34,848 Speaker 1: sing dollar have the same impact in 246 00:12:35,380 --> 00:12:39,229 Speaker 1: say the UK or the US further a field where 247 00:12:39,239 --> 00:12:43,030 Speaker 1: the currencies there do tend to be as stable as Singapore. 248 00:12:43,039 --> 00:12:45,710 Speaker 1: How does it compare in terms of impact? 249 00:12:45,719 --> 00:12:48,869 Speaker 2: So the US dollar is kind of like seen as 250 00:12:48,880 --> 00:12:52,209 Speaker 2: the world reserve currency, right? So most of the time 251 00:12:52,554 --> 00:12:55,223 Speaker 2: when our domestic policies are not going to have an 252 00:12:55,234 --> 00:12:58,174 Speaker 2: impact on the US dollar. And up until recently, the 253 00:12:58,184 --> 00:13:00,705 Speaker 2: US dollar was quite high against the SING dollar. I 254 00:13:00,715 --> 00:13:03,804 Speaker 2: think it was almost up to 1.4% at one point. 255 00:13:03,905 --> 00:13:07,325 Speaker 2: So for us, the US dollar was appreciating against the 256 00:13:07,335 --> 00:13:09,664 Speaker 2: Sing dollar. So for us, that was a little bit 257 00:13:10,119 --> 00:13:14,059 Speaker 2: not to our advantage. So because their currency markets are 258 00:13:14,070 --> 00:13:16,969 Speaker 2: probably much larger than ours, their demand for their currency 259 00:13:16,979 --> 00:13:19,280 Speaker 2: is much larger than the demand for the same dollar. 260 00:13:19,450 --> 00:13:21,400 Speaker 2: So I think we will have a little bit less 261 00:13:21,409 --> 00:13:23,729 Speaker 2: impact in that regard. I don't think going to the 262 00:13:23,739 --> 00:13:26,030 Speaker 2: US is that much cheaper now, I don't think it 263 00:13:26,039 --> 00:13:30,599 Speaker 1: will ever be cheaper. Unfortunately, that's just the nature of 264 00:13:30,609 --> 00:13:33,280 Speaker 1: the US dollar. The Greenback has always been known to 265 00:13:33,289 --> 00:13:36,969 Speaker 1: be that powerful that influential on the rest of us. 266 00:13:36,979 --> 00:13:37,829 Speaker 1: It's the king of the bus, 267 00:13:38,133 --> 00:13:42,754 Speaker 1: right? The other aspect about the sing dollar strength that 268 00:13:42,763 --> 00:13:45,374 Speaker 1: I wanted to throw across to you is when it 269 00:13:45,383 --> 00:13:49,353 Speaker 1: comes to investments, right? At money talks, we always want 270 00:13:49,364 --> 00:13:52,333 Speaker 1: to find out how is this going to affect my portfolio? Right? 271 00:13:52,343 --> 00:13:54,443 Speaker 1: How is this going to affect the funds I'm investing in? 272 00:13:54,453 --> 00:13:55,044 Speaker 1: So 273 00:13:55,333 --> 00:13:57,814 Speaker 2: when it comes to investing, it may not be that 274 00:13:57,823 --> 00:14:00,364 Speaker 2: good of a thing. If you're investing in foreign denominated 275 00:14:00,374 --> 00:14:03,483 Speaker 2: assets like stocks, for example, let's say you're investing in 276 00:14:03,494 --> 00:14:05,624 Speaker 2: Australian stocks and you bought it a year ago right 277 00:14:05,708 --> 00:14:08,987 Speaker 2: now that the Singapore dollar has appreciated against the Australian 278 00:14:08,997 --> 00:14:11,237 Speaker 2: dollar that will actually eat into your returns on your 279 00:14:11,247 --> 00:14:15,607 Speaker 2: Australian stocks. Because for example, if your stock has gone 280 00:14:15,617 --> 00:14:18,468 Speaker 2: up 10% but the Singapore dollar has gone up 2% 281 00:14:18,477 --> 00:14:22,398 Speaker 2: against the Australian dollar, then now your real returns will 282 00:14:22,408 --> 00:14:23,697 Speaker 2: only be about 8%. 283 00:14:23,708 --> 00:14:25,588 Speaker 1: So it shrinks my returns. Yes. 284 00:14:25,848 --> 00:14:28,307 Speaker 2: Whereas on the flip side, if you're investing in something 285 00:14:28,317 --> 00:14:31,797 Speaker 2: that is appreciating against the Singapore dollar, maybe the US dollar, 286 00:14:31,817 --> 00:14:33,417 Speaker 2: your returns will now be outside 287 00:14:33,502 --> 00:14:35,941 Speaker 2: because you get the returns on your asset as well 288 00:14:35,952 --> 00:14:38,901 Speaker 2: as the increase in the appreciation in the currency. If 289 00:14:38,911 --> 00:14:40,382 Speaker 2: you convert it back to sing dollar. 290 00:14:40,601 --> 00:14:43,031 Speaker 1: What about investing in local 291 00:14:43,041 --> 00:14:47,552 Speaker 2: stocks? People think that when you invest in local companies 292 00:14:47,562 --> 00:14:50,202 Speaker 2: that you are not exposed to exchange rate, currency risk 293 00:14:50,271 --> 00:14:52,901 Speaker 2: at all actually you have to watch out for what 294 00:14:52,911 --> 00:14:55,762 Speaker 2: you are investing in because a lot of companies they 295 00:14:55,771 --> 00:14:58,552 Speaker 2: also operate in foreign markets, right? So they have foreign 296 00:14:58,562 --> 00:15:01,211 Speaker 2: derived income. So if there's an exchange rate 297 00:15:01,306 --> 00:15:05,185 Speaker 2: that their foreign derived income may also fluctuate. 298 00:15:05,435 --> 00:15:08,185 Speaker 1: Wow. Ok. See I completely miss, yeah. 299 00:15:08,195 --> 00:15:10,375 Speaker 2: So you have to be a little bit wary. People 300 00:15:10,385 --> 00:15:13,036 Speaker 2: think about this a lot when they're thinking of us companies, 301 00:15:13,046 --> 00:15:15,825 Speaker 2: for example, the example people like to give is Nike 302 00:15:15,916 --> 00:15:18,236 Speaker 2: because Nike is a US company. So you think of 303 00:15:18,245 --> 00:15:20,145 Speaker 2: them as, oh, as long as the US economy is 304 00:15:20,156 --> 00:15:22,866 Speaker 2: doing well, Nike will be doing well. But actually Nike 305 00:15:22,875 --> 00:15:26,125 Speaker 2: only derives 46% of their income from the US market 306 00:15:26,135 --> 00:15:27,966 Speaker 2: and because they sell globally and the rest of it 307 00:15:27,976 --> 00:15:28,945 Speaker 2: is international. 308 00:15:29,219 --> 00:15:33,390 Speaker 2: So then if for example, the euro has a fluctuation 309 00:15:33,400 --> 00:15:36,770 Speaker 2: against the US dollar and maybe the Euro goes down, 310 00:15:36,780 --> 00:15:40,429 Speaker 2: then their foreign derived income can also decrease but then 311 00:15:40,440 --> 00:15:44,020 Speaker 2: they report on their balance sheet in US dollar. So 312 00:15:44,030 --> 00:15:46,380 Speaker 2: then their gross profit margin. I know it sounds a 313 00:15:46,390 --> 00:15:49,619 Speaker 2: bit technical but like that will be lesser because of 314 00:15:49,630 --> 00:15:51,210 Speaker 2: the income currency exchange. 315 00:15:51,229 --> 00:15:52,780 Speaker 1: No, I get that. I get that and I I 316 00:15:52,789 --> 00:15:56,020 Speaker 1: think you've explained it really, really well there because I'm 317 00:15:56,030 --> 00:15:57,330 Speaker 1: pretty sure every other 318 00:15:57,432 --> 00:16:01,903 Speaker 1: investor out there particularly retail investors will be thinking along 319 00:16:01,913 --> 00:16:03,942 Speaker 1: those lines that you just mentioned like, oh if it's 320 00:16:03,953 --> 00:16:05,862 Speaker 1: a US based, I'm pretty sure it's going to do. Well, 321 00:16:05,872 --> 00:16:08,293 Speaker 1: because by virtue of the fact that the US dollar 322 00:16:08,302 --> 00:16:10,662 Speaker 1: is already stronger than the Sing dollar, I'm safe. But 323 00:16:11,103 --> 00:16:14,833 Speaker 1: you have to look at the company's financials, you actually 324 00:16:14,843 --> 00:16:18,252 Speaker 1: have to look at and assess the company's financials. Think 325 00:16:18,263 --> 00:16:21,122 Speaker 1: about how much of their income actually comes from the 326 00:16:21,132 --> 00:16:22,763 Speaker 1: US market. Right. 327 00:16:22,773 --> 00:16:24,843 Speaker 2: So, if you're thinking of it in a Singapore context, 328 00:16:24,853 --> 00:16:25,543 Speaker 2: I think about the, 329 00:16:25,645 --> 00:16:28,315 Speaker 2: the most is usually to do with reeds. Sores are 330 00:16:28,325 --> 00:16:30,856 Speaker 2: like a way to invest in real estate, right? And 331 00:16:30,866 --> 00:16:33,755 Speaker 2: a lot of Singapore reeds have foreign properties where they're 332 00:16:33,765 --> 00:16:37,036 Speaker 2: getting foreign rental income. Yeah. So you have to see 333 00:16:37,046 --> 00:16:40,195 Speaker 2: like how much of their income is actually from foreign 334 00:16:40,205 --> 00:16:43,825 Speaker 2: economies and whether that will affect their own. So if 335 00:16:43,835 --> 00:16:47,495 Speaker 1: I'm investing in an that is in the US or 336 00:16:47,505 --> 00:16:49,575 Speaker 1: the bulk of my revenue is going to come from 337 00:16:49,585 --> 00:16:53,736 Speaker 1: the US market, that generally means I'm alright. 338 00:16:54,030 --> 00:16:56,030 Speaker 2: Yes, because the US dollar is strong. So when you 339 00:16:56,039 --> 00:16:58,840 Speaker 2: convert it back to the same dollar, it's still good. Ok. 340 00:16:58,849 --> 00:17:02,270 Speaker 2: Whereas if they're investing in European assets, for example, then 341 00:17:02,280 --> 00:17:04,079 Speaker 2: that might not be so good for us because right 342 00:17:04,089 --> 00:17:06,020 Speaker 2: now the Euro is a little bit weaker. Wow, 343 00:17:06,030 --> 00:17:09,109 Speaker 1: that was an eye opener because it really does make 344 00:17:09,119 --> 00:17:13,280 Speaker 1: you think about your portfolio and really reconsidering what the 345 00:17:13,290 --> 00:17:16,040 Speaker 1: strategy should be. That being said though, 346 00:17:16,328 --> 00:17:20,779 Speaker 1: does this mean that I should be rooking my portfolio now? 347 00:17:20,788 --> 00:17:24,058 Speaker 1: And changing my strategy and ducking out or what should 348 00:17:24,068 --> 00:17:25,138 Speaker 1: I be doing then 349 00:17:25,400 --> 00:17:28,689 Speaker 1: considering this is where we're at with the sing dollar. 350 00:17:29,010 --> 00:17:32,560 Speaker 2: Well, I think personally there's no reason to be impulsive 351 00:17:32,569 --> 00:17:35,500 Speaker 2: because if we are worried about exchange rates and all 352 00:17:35,510 --> 00:17:37,689 Speaker 2: the more these companies will be worried about exchange rate. 353 00:17:37,699 --> 00:17:39,650 Speaker 2: So actually what a lot of these companies do do 354 00:17:39,660 --> 00:17:42,609 Speaker 2: is they hedge the exchange currency risk on their end. 355 00:17:42,880 --> 00:17:45,119 Speaker 2: So there's a lot of like financial derivatives that they 356 00:17:45,130 --> 00:17:47,560 Speaker 2: can do. So they kind of have more of a 357 00:17:47,569 --> 00:17:50,709 Speaker 2: stable idea of what the currency exchange will be. 358 00:17:51,119 --> 00:17:55,250 Speaker 2: So you can kind of defer this responsibility to some 359 00:17:55,260 --> 00:17:58,780 Speaker 2: extent to the company itself and let them hedge the 360 00:17:58,790 --> 00:18:01,488 Speaker 2: currency risk for you. So what's important for you to 361 00:18:01,500 --> 00:18:04,229 Speaker 2: do it as an individual investor is just to understand 362 00:18:04,239 --> 00:18:05,969 Speaker 2: like what is the nature of the business and whether 363 00:18:05,979 --> 00:18:08,560 Speaker 2: you're comfortable with that. So unless there's some like big 364 00:18:08,569 --> 00:18:11,510 Speaker 2: macro economy thing that is happening, for example, like the 365 00:18:11,520 --> 00:18:12,430 Speaker 2: Russia Ukraine thing, 366 00:18:12,512 --> 00:18:14,622 Speaker 2: you don't want to hold your assets in like Russian 367 00:18:14,633 --> 00:18:16,613 Speaker 2: denominated assets, right? That's 368 00:18:16,623 --> 00:18:19,141 Speaker 1: although I'd be fascinated to find out who has, 369 00:18:20,003 --> 00:18:22,071 Speaker 2: that might be a little bit different, but we're talking 370 00:18:22,083 --> 00:18:24,912 Speaker 2: about smaller fluctuations and in exchange rates then, yeah, I 371 00:18:24,922 --> 00:18:26,583 Speaker 2: don't think there's any need to be impulsive. 372 00:18:26,593 --> 00:18:30,842 Speaker 1: That's fantastic advice. Thanks for helping us dig deeper into 373 00:18:30,853 --> 00:18:33,821 Speaker 1: what the strengthening of the Singapore dollar 374 00:18:33,906 --> 00:18:36,984 Speaker 1: means. And of course, thanks to you our listener. If 375 00:18:36,994 --> 00:18:40,095 Speaker 1: you've enjoyed this episode of Money Talks, there's more content 376 00:18:40,105 --> 00:18:43,095 Speaker 1: for you to enjoy. Simply follow us on Apple podcasts 377 00:18:43,105 --> 00:18:46,484 Speaker 1: or Spotify. Leave a review. Give us five stars. Why 378 00:18:46,494 --> 00:18:50,295 Speaker 1: don't you? The team behind Money Talks is Joanne Chan, Jacquelyn, 379 00:18:50,306 --> 00:18:54,926 Speaker 1: Chan Christina Robert Charlene. So, and I'm Andrea Ha.