The Ringgit started to weakened in 2013 when the chairperson of Federal Reserve (FED), Ben Bernanke, announced that the FED would no longer be purchasing bonds as a measure to gradually reduce the amount of money it was feeding into the the US economy. Then the currency weakened further when the Brent Oil price plunged from USD 116 to USD 45 per barrel in 2015 as Malaysia has always been an oil exporting nation. During the same year, the now well-known 1MDB scandal exploded and caused the Ringgit to slide to RM4.47 per dollar.

 

The export companies which earned US dollars prospered as the weak Ringgit made their products more competitive internationally. It was a change of fortune and the furniture sector was one of the benefited sector. 

 

The first chart shows the USD/MYR chart since 2013. The second chart is a rebasing chart showing the gain of share price (in terms of percentage) of the furniture companies since 2013. The plunge of USD/MYR from 3 to 4.47 aided Pohuat, Liihen, and Hevea to churn out a 7-bagger or 700% return in 4 years time. 

 

Will the history repeat itself this time?

 

(Click the following link if the images are too small to view) - https://www.trendtrading7.com/blog/the-furniture-sector-and-the-us-dollar-will-the-history-repeat-itself