This currency has lost 97% of its value against the US dollar
August 10, 2015
[Editor’s note: Sovereign Man’s Chief Investment Strategist Tim Staermose is filling in today while Simon is teaching at his annual youth entrepreneurship workshop.]
Bonhoeffer Fund's performance update for the month ended July 31, 2022. Q2 2022 hedge fund letters, conferences and more The Bonhoeffer Fund returned 3.5% net of fees in July, for a year-to-date return of -15.8%. Bonhoeffer Fund, LP, is a value-oriented private investment partnership for . . . SORRY! This content is exclusively for Read More
In 1970, one United States dollar bought 360 Japanese yen. It also bought 363 Indonesian rupiah. Today, that same dollar buys just 124 yen. But, it buys over 13,500 rupiah.
Let that sink in. While the yen has gained 190% versus the greenback over the past 45 years, the Indonesian rupiah has lost over 97%!
First lesson: clearly, it matters a great deal in what currency you keep your savings.
But the above numbers are backward-looking. A shrewd investor will sell what’s expensive and buy what’s cheap. And the Indonesian rupiah certainly qualifies.
Indonesia is the world’s fourth most populous country. There are over 160 milion people just between the ages of 25 and 34, all with their peak earning and spending years ahead of them.
The economic growth potential from these people working, producing, and rising into the middle class is tremendously exciting.
Developing nations in this stage also typically have a significant apetite for giant infrastructure projects as more and more people graduate up the transportation pyramid from bicycles to motorbikes to small cars.
They need higher quality roads, and more of them. And as many of these new middle class start traveling by airplane for the first time ever, they also need more, bigger airports.
To give you just one example, there are almost no direct flights from Indonesia to Europe and there are none at all to the United States.
This doesn’t make any sense– mo