taylorjr94
New member
Most economic students would learn about Interest Rate Parity theory, so I decided that it was worthwhile to analyse how the SGD : MYR Exchange rates vs SGD : MYR Interest Rates behave
I assume one keeps RM1.9 in MYRFD, and compounded it over the last 23 years, vs SGD1 at SGDFD and compounded it over the last 23 years. Why RM1.9 to SGD is because that's the exchange rate at 1997 (aka same amount of money both sides)
First interpretation:
SGD interest rates reported to World Bank is abnormally low. At these interest rates, keeping money in MYR in MYR FD would be worth more than keeping SGD in SGD FD, because even with the devalued exchange rate, the MYR is worth more converted to SGD.
The results didn't make sense to me. There's clearly something wrong with the SGD deposit rates because it's
- Source Date : SGD:MYR Exchange rates : https://www.bnm.gov.my/exchange-rat...nm_exchange_rate_display_portlet_quotation=rm
- Interest rate : World Bank Deposit Interest Rate : https://data.worldbank.org/indicator/FR.INR.DPST
- So, the theory is that SGD1, at SGD Interest rates, should be worth more than MYR1.9 (at 1997)), at MYR interest rates.
- Result of analysis here:
I assume one keeps RM1.9 in MYRFD, and compounded it over the last 23 years, vs SGD1 at SGDFD and compounded it over the last 23 years. Why RM1.9 to SGD is because that's the exchange rate at 1997 (aka same amount of money both sides)
First interpretation:
SGD interest rates reported to World Bank is abnormally low. At these interest rates, keeping money in MYR in MYR FD would be worth more than keeping SGD in SGD FD, because even with the devalued exchange rate, the MYR is worth more converted to SGD.
The results didn't make sense to me. There's clearly something wrong with the SGD deposit rates because it's