Another OPR cut by Bank Negara Malaysia?


Since January 2020 Bank Negara Malaysia has gradually cut the OPR from 3.00 to 1.75% and we are expecting them to go further low as we are still struggling to expand our GDP which has dropped 28.6% in April and later reduced to 19.5% in May and 3.2% on June.


Although the numbers are showing signs of recovery, we are still amid of global economy crisis. There are certain industries like Tourism and Aviation which are still struggling badly but the promise of vaccine discovery is keeping them afloat. Many companies have retrenched employees due to the scenario and many more companies are cutting wages and hoping to recover very soon.


Cutting down the OPR means well to anyone who is planning to apply for loans as the interest rate is currently at the lowest. It could be good news for all those who have loans to be paid – re arranging your loans will be very much helpful, BUT what does it mean to savers?


If you are saving your money in the bank, the interest paid is at the lowest and the investments like fixed deposit is expected to give a very minimal return. Banks can give away 10 ringgits in loan for every 1 ringgit you have saved with them and at this point of time the return of investment with banks is not attractive.


Many individuals have started investing in stock market as Bursa Malaysia confirmed that the rate of CDS account opening has increased dramatically during the MCO period. Yes, investing in stocks at this moment is one of the best investments anyone can make but keep in mind that there are risk factors involved in them as well.


Never put all the eggs in one basket, - Warren Buffet. Keep in mind that investment has risk to it thus diversification is one vital factor that we need to consider before we make any financial decision.


Crisis has two definition – danger and opportunity. The discovery of Covid-19 vaccine is already at the final stage – Russians who claimed the first vaccine discovery has started human trials and many other pharmaceutical companies are already reaching the final stage.


Could we expect the economy to recover back to normal soon? We doubt that, although the vaccines are in the final stage of approval it may take at least a year for us to see the economy to be back to normal.


The best anyone could do now, is to be in control of your money, every single ringgit that you spend must be spent wisely and its best to avoid unnecessary expenses.


We at Monest really hope that the number of Covid Cases will decrease and hoping to have our economy back to normal after the RMCO period is over.


By Suren Subramaniam | August 17, 2020

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