Rise of the Malaysian Ringgit

August 21st, 2010 admin

In a move welcomed by investors, Bank Negara (Malaysian Central Bank) liberalised the foreign exchange administration rules on the Malaysian Ringgit.

Liberalisation on trading of the Malaysian Ringgit means that Malaysian companies, or companies with dealings in Malaysia, would be able to hedge against fluctuations in the Ringgit freely. In the overall scheme of things, this means that:

1. It is now less risky to do business in/out of Malaysia, leading to:
2. Increased demand for the Malaysian Ringgit, leading to:
3. Appreciation of the Malaysian Ringgit.

Malaysian Ringgit against the Singapore Dollar

On 19th Aug 2010, the Ringgit to soar to its highest level against the US Dollar in a whooping 13 years, buoyed by expectation that global investors would shift the allocation of capital into Malaysia.

Nothing much for the average Singaporean to worry about as the exchange rate between the Singapore Dollar and the Malaysian Ringgit still holds at about 1 Singapore Dollar = 2.31 Malaysian Ringgit. However, if you have an outstanding mortgage on a property in Johor Bahru, or if you have a dependent residing in Johor Bahru, you might want to consider putting part of your savings into Malaysian Ringgit.

The Malaysia economy is targeted for a 8-10% growth in 2010 and the growth rate will likely sustain in the long term. The value of your Singapore Dollar against the Malaysian Ringgit may therefore drop in the next decade or so.

Hopefully, petrol in Malaysia would still remain cheap!

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Entry Filed under: Business and Investment,News and Information