Ringgit Continues Its Decline Against SGD And USD
The ringgit is at 4.6745 against the USD today, marking an over seven-month low.
Subscribe to our Telegram channel or follow us on the Lumi News app for the latest stories and updates.
The Malaysian Ringgit continues to weaken against the Singapore dollar and the greenback.
The ringgit is at RM3.46 today as it continues to beat its all-time low record against the Singapore dollar.
This slump marks an over seven-month low, Reuters points out.
On 21 June 2023, the ringgit registered RM4.6485 to USD1 and continues to dip at RM4.6745 today.
As reported by FMT, according to Danny Wong, CEO of Areca Capital, the strength of the US dollar, which has been on an upward trend as a result of the US Federal Reserve’s aggressive rate hikes, is a major factor in the ringgit’s decline, far outpacing that of most Asian nations.
“SGD seems to be more resilient as Singapore focuses more on controlling the value of its currency through the exchange rate, and not so much through interest rates,” he said.
Another reason for this scenario is based on the market forces which is driven by demand, according to Mohd Afzanizam Abdul Rashid, as reported by Malaysia Now.
He also added that there are possibilities for the market forces to push the ringgit above RM5 against the US dollar.
Economy Minister Rafizi Ramli also pointed out that the US’s financial and economic instability was to blame for the decline in the value of the ringgit.
In the meantime, Bank Negara Malaysia stated that the ringgit’s decline versus the US dollar was not specific to Malaysia and that the currency should strengthen as global worries fade.
Consequences Of Ringgit Decline
While there are many reasons for the ringgit’s recent decline, it is the public that bears the brunt.
Here is how the value of the ringgit might affect Malaysians.
According to an article by iMoney, the weaker ringgit benefits local exporters since it lowers production costs, which is anticipated to enhance international demand.
This means that businesses sell their goods for a bigger profit in higher-valued currencies like the US dollar while paying for cheaper manufacturing in ringgit.
A strong or weak currency is unlikely to have any immediate effects on Malaysian companies that produce and sell goods and services with domestically manufactured and purchased materials and components.
However, if the products and services that a business sells locally, whether largely, or totally are from a foreign economy, production costs may increase.
Vehicle manufacturers are among these businesses, as they can be importing parts and components from nations like Japan and South Korea.
With the ringgit weakening, purchasing power will also shrink.
Malaysians will have to pay more if they want to buy and use products and services from overseas producers. This holds true for both imported and domestically manufactured commodities that incorporate materials, know-how, or both from other economies.
To make matters worse, when economies import goods from nations with stronger currencies, a weaker currency can raise inflation. Additionally, it will make international travel undesirable.
This is where the knowledge of investments, savings and managing a budget comes in handy. With a lot happening in the world economy there is not much one can do to avoid being impacted by it either positively or negatively.
Keeping that in mind, it is very important to have some knowledge of how money works and what can be done to minimise suffering the consequences of a declining ringgit.
There is a saying in Bahasa Malaysia: “Sediakan payung sebulum hujan” which translates to it is always wiser to be prepared early than to feel sorry later.
Share your thoughts with us via TRP’s Facebook, Twitter, and Instagram.
