The declining MYR to USD from June 2014 to August 2015 down by 23% from its highest to the lowest
With the current currency crisis and economic climate, many are feeling worried, confused, angry, frustrated, or even helpless. We see it in the headlines – The currency is getting weaker, we are hitting new lows day after day after day. And there is a general feeling of fear and uncertainty among the people. But in this article I’m going to share with you, that in this economic environment there will be those who will Thrive, Survive, or Die and I will be sharing with you the differences between these groups of people, so that you can be aware of where you stand, and what you can do about it. To be able to choose which group of people you want to be a part of and to start taking control, be confident, and perhaps even excited for this crisis!
In this article I will be splitting it into four sections, the first is to explain the key drivers of a currency. The second will be explaining the consequences of a weakening currency. The third will be explaining the different groups of people, and finally the fourth is to share with you what you can do amidst this currency crisis.
What drives a currency?
There are two parts to it, there are the fundamentals, and the technicals. The fundamentals includes the current political situation, the economics of the country, and any current events (news) that affects the country which impacts the general sentiments or feelings of people positive or negative. The technicals are responsible for most of the day to day fluctuations and key price/trading levels. So those are the key forces that drives the movement of a currency.
What happens when currencies weaken?
Imports start getting more expensive, local consumers will buy less of these imported goods and services. So on the forefront importers will suffer. Companies heavily reliant on imports will struggle, and owners may require to take cost cutting measures to survive. Now the ones who will really suffer the most are some of the employees of these importing companies, who may be subjected to these cost cutting measures. They may be required to take a pay-cut during these though times, or even lose their jobs. And overall those who are earning in the local currency will suffer with the declining currency, as imported goods become more and more unaffordable, their standard of living lowers.
Who will thrive?
As we see people turning away from imported goods and services, people will start switching to cheaper local goods and services. So, local businesses dealing with local goods and services will thrive in this environment. Exporters will also see growth as demand for local goods and services internationally will increase due to it being relatively cheaper and more competitive. Informed investors will also start shifting their money accordingly, investing more in businesses and financial instruments that will benefit from the declining currency.
What can you do about it?
As we can see the group with the most options and control are the business owners and investors, they have the most maneuvering options in this climate. Those who will most likely suffer are the employees of the affected businesses. This is the time for you to start looking into local goods and services, local businesses that you can start, get into, or invest in. If you want to continue a career path this is the time to look for jobs that will pay in a stronger foreign currency, and develop the required skills to get those jobs. With the globalised world we live in today, the internet has erased borders and you can even offer your services on freelance websites or offer local goods online to the international market.
As currency and financial crises come and go, more and more people are waking up to the fact that money is not real sustainable wealth. Currency (money) is one of the worst forms of maintaining wealth, you will continuously be robbed and become a victim of the monetary system if you do not learn how to secure your wealth in other forms. Because, if it is not the weakening currency that’s robbing your wealth, inflation will – prices will continuously go up and every dollar you hold on to will be worth less and less, because it can only be exchanged for less and less goods and services over time. Real wealth can be in the form of real estate, commodities such as precious metals, businesses, and anything that creates and adds value which I will cover in another article.
At the end of the day it is the people who take proactive solution-focused action that will thrive or survive in this environment. Whereas those who only stick back, complain, and blame everything and everyone else will be the ones who suffer in this environment. Take the first step to taking control of your financial well-being by investing in your financial education, learning more about creating real wealth through investing and entrepreneurship via seminars, books, videos, and people who are already successful in it. You will better understand what’s going on in the economic environment, and be empowered with the skills and tools to thrive financially in any environment. Knowledge will make you aware, applied knowledge will make you rich. Plan your road to get there and take action to get what you want.
The economic environment will always be changing, the question is: Will you be able to adapt and take advantage of the changes? Or will you be swept away and become another victim of change?