Malaysian Ringgit was strong and steady in 2012 and 2013 but then it started to lose it's value against US dollar, Euro and GBP. The biggest impact in RM was the oil price. Malaysia still heavily dependent on oil price. If we look at the graph RM started to lose it's value after April 2015. During these times when US and Europe wanted to impose sanction on Russia. US started to get their currency strong so that Russian Ruble can be weak. It was even addressed by President Obama that US made Russian Ruble weaker. What Malaysia can do is to increase the demand for RM with in Malaysia and also in internationally. One of the ways countries increase demand for their currency is by having currency futures agreement with other countries because it increases the demand for RM and also it can increase the foreign currency available in Malaysia. Reducing the Interest RateThe interest rate in Malaysia is still very high, it is above 3.2 percent, the interest rate in US and in Europe is below 0.5 percent. When interest rates are low it reduces the cost of financing, therefore it increases the demand for money. Low interest rates discourages the consumers to deposit their money because the return is low, therefore they will invest their money or spend it. In conclusion Malaysian Ringgit can go back to RM3 to 1 US dollars.
Sam
4/30/2016 02:06:01 am
Malaysian Ringgit is highly dependent to oil price. Now a days Malaysian ringgit is getting stronger because of an increase in oil price.
Reply
Hong
7/8/2016 06:43:32 pm
Exchange rate has big impact on foreign investor this could be the right time to invest in Malaysia, since investing now in Malaysia while ringgit is weak and getting high return when ringgit is stronger, but future is uncertain, look what happened to UK. Brexit destroyed the Pound Sterling. So many people lost thousands of dollars.
Reply
Your comment will be posted after it is approved.
Leave a Reply. |
AuthorEcon2u and others CategoriesArchives
August 2017
|