MYR - Malaysian Ringgit

The history of the formation and development of the Malaysian Ringgit (MYR)

Before its inception

Before the Malaysian Ringgit became the official currency, Malaysia used various types of currencies, including the British Pound and other colonial currencies.

The emergence of the Malaysian Ringgit

In 1967, the Malaysian Ringgit was officially introduced after Malaysia separated from the Federation of Malaya and established its own monetary system.

The development process of the Malaysian Ringgit

In the 1970s, the Malaysian Ringgit began to be officially used and developed strongly. Malaysia established a Central Bank system to manage and regulate national monetary policy.

In the late 1980s and early 1990s, the country experienced rapid economic growth, making the Malaysian Ringgit strong and widely used in international markets.

In 1997, Malaysia was severely affected by the Asian financial crisis. Therefore, the government had to implement capital control measures and maintain the exchange rate until 2005.

Currently, the Malaysian Ringgit is widely used throughout the country and is the main currency in trade transactions and in the Southeast Asian region.

Malaysian Ringgit (MYR) Denominations

Currently, the Malaysian Ringgit is issued in the following denominations of banknotes and coins: 

Malaysian Ringgit banknotes

• Commonly used: RM1, RM5, RM10, RM20, RM50, RM100.

• Rarely used: RM2 (no longer issued but still in circulation); RM60, RM600 (commemorative coins)..

Malaysian Ringgit coins

• Commonly used: 5 sen, 10 sen, 20 sen, 50 sen.

• Rarely used: 1 sen (no longer issued but still in circulation)

Malaysian Ringgit (MYR) exchange rate

Currently, the exchange rate of the Malaysian Ringgit against major currencies is as follows:

• 1 MYR = 0.2299 USD (United States Dollar)

• 1 MYR = 0.2165 EUR

• 1 MYR ≈ 5,599 VND

The MYR is of low value compared to strong foreign currencies such as the US Dollar (USD), Euro (EUR), and major regional currencies due to various economic and political factors.

Factors affecting the value of Malaysian Ringgit (MYR)

The value of the Malaysian Ringgit (MYR) is influenced by various economic, political, and international market factors. Here are some key factors causing the Ringgit to tend to depreciate:

Domestic economic situation

The Malaysian economy directly affects the value of the Malaysian Ringgit. In recent years, Malaysia's economic growth has tended to slow down. The slowing economy reduces the strength of the local currency and fails to attract foreign investment..

Decline in oil and export commodity prices

Malaysia is a country with an economy dependent on the export of crude oil, natural gas, and other commodities. Therefore, when oil prices decrease, the country's foreign exchange earnings also decline, leading to a decrease in the value of the MYR.

Trade balance deficit

When Malaysia imports more than it exports, a trade deficit will occur. When there is an imbalance in the supply and demand for foreign and domestic currencies, the value of the Malaysian Ringgit will significantly decrease.

Expansionary monetary policy

The Central Bank implements an expansionary monetary policy such as lowering interest rates to boost domestic economic growth. However, this also makes the Malaysian Ringgit less attractive to investors. Investors may withdraw funds, putting pressure on the local currency.

Unstable political situation

The unstable political situation, such as the scandals involving the 1MDB national investment fund, has diminished investors' confidence in Malaysia. This has led to capital withdrawal by foreign investors, reducing the domestic foreign exchange reserves and significantly devaluing the Ringgit.

The low value of the Malaysian Ringgit is due to many influencing factors that make it difficult for the MYR to stabilize its exchange rate. Although the Malaysian government and the Central Bank have stabilization policies, they have not been truly effective. Therefore, careful management policies are needed to help restore and maintain the value of the Malaysian Ringgit in the future.

Future of the Malaysian Ringgit (MYR)

The future of the Malaysian Ringgit (MYR) remains a subject of considerable interest and speculation among economists, financial analysts, and investors alike, as the currency's trajectory is markedly influenced by a confluence of both domestic and international factors. In the context of Malaysia's economic resilience, which is anchored by its diversified economic base that includes robust sectors such as manufacturing, agriculture, and increasingly, digital technology, the MYR's stability may be bolstered by prudent fiscal policies and strategic governmental initiatives aimed at fostering sustainable growth. However, the ringgit is not insulated from external pressures; fluctuations in global commodity prices, particularly for palm oil and crude oil—two of Malaysia's key exports—can significantly impact the currency's valuation.

Furthermore, the overarching dynamics of geopolitical developments, shifts in global trade patterns, and the monetary policies articulated by major economies, especially the United States, play pivotal roles in shaping investor sentiment towards emerging market currencies, including the MYR. Consequently, as Malaysia continues to navigate the complex landscape characterized by potential economic recovery in a post-pandemic context, the adaptability of its monetary framework, together with its ability to maintain investor confidence, will be critical determinants in defining the ringgit's future path—an endeavor that necessitates a nuanced understanding of both local economic indicators and broader global financial trends.