Issued by the Bank Negara Malaysia, The Malaysian Ringgit is the official currency of Malaysia. The general abbreviation of the Malaysian Ringgit is MYR. Introduced after replacing the Malaysian Dollar in the year 1967,
the Malaysia Currency also announced its subunit called Sen. The Ringgit is divided into 100 Sen. The term Ringgit means jagged. This currency is sometimes still referred to as the Dollar, like before. The new 50 Sen coin has a high-security feature to avoid fake coin circulation. The Old 1 Sen Coin can still be used as money.
Some facts that you ought to know about the MYR:
1. The nicknames for Malaysian Ringgit are JIAO, MAO, FEN.
2. RM is the symbol of the Ringgit.
3. The most repeatedly used coins are 5 SEN, 10 SEN, 20 SEN, 50 SEN.
4. The most frequently used banknotes are RM1, RM5, RM10, RM20, RM50, RM100.
History of the Malaysian Ringgit
Malaysian Ringgit, MYR, is presently the official currency of Malaysia as introduced and declared by the Bank Negara Malaysia (the Central Bank). The currency was introduced back in the year 1967, and it replaced the British Borneo, which was the then-official currency of Malaysia. On 12th June 1967, the Bank introduced the currency in terms of coins. These coins were introduced in five denominations- 1, 5, 10, 20, and 50 sen and they bore the portrait of Tuanku Abdul Rahman, the first ruler of independent Malaya.
Till the year 1975, the currency was called Malaysian Dollar, and it was only in the year 1975 that the official name was given- Ringgit. The Ringgit is divided into 100 sen, which is referred to as the subunit of Ringgit.
The term Ringgit is derived from ?jagged? which is a Malay word referring to the serrated edges of Spanish dollars. The link between Spanish dollars and the Malaysian market goes back to the colonial time when Spanish dollars were the only available currency. Right after gaining independence, the first independent government of Malaysia established a central bank. The Malaysian dollar was introduced, and soon, the circulation of British Borneo stopped completely. The bank ensured to replace the dollar symbol with M$. Presently, the Malaysian Ringgit is denoted with ?RM?, and the currency code is MYR.
The Malaysian Dollar faced difficulties in the initial years as its market value declined from US$2.80 to US$2.40. In the present world, the currency has occupied a significant position. The trend started in 1998 when the currency was pegged to the US dollar at the exchange rate of 1 USD = 3.80 MYR. According to the data, the currency was valued at 4.17 and 4.21 per USD in the year 2022. The fluctuating value is largely due to the emerging political trends in the market and energy prices (Malaysia is an exporter of natural gas and oil).
The currency is available in all five denominations as introduced in 1967. It is the larger denominations- 10 and 50 sen that are commonly used for transactions. The official exchange rate for the currency lies between 3%-5% and can be purchased either online or at retail outlets. The rate of the currency is free-floating, depicting its strong market value, but it is not traded off-shore.
Factors affecting Malaysian Ringgit Currency
Not one but several factors play an impactful role when it comes to the exchange rate or Ringgit. Recent trend shows a decline in the Malaysian Ringgit against Singapore Dollars and USD. Let's have a look at the factors that affect the Malaysian Ringgit currency:
1. Prices of crude oil:
Malaysia is one of the world's oil-producing countries. And since oil is a major export and import product across the world, international oil prices heavily impact the Malaysian exchange rate. With a decline in Brent oil prices (the oil extracted from the North sea), the prices of crude oil also witnessed a decline. The OPEC (Organisation of the Petroleum Exporting Countries) members are entitled to the task of operating the oil prices and production. So, if the Brent and crude oil productions are brought down, the prices will rise and vice-versa.
2. The political landscape and rising concerns:
The overall political and economic conditions of any country are essential for foreign investors. With foreign companies suspecting a political change in the country following the general elections in Malaysia and the rising debt of the country, foreign investments may also witness a turn. All these, in turn, affect the exchange rate of the Malaysian Ringgit or any other currency. So, it is quintessential for a nation to keep a balance maintained in all aspects, be it economical, political, or social, to attract investors and developmental works.
3. Better rates elsewhere:
The rising values of competitive currencies also impact the currency of the respective country. MYR can suspect a lower investment due to hikes in the interest rates of the US Dollar. From the perspective of investors, the US Dollar will turn out to be more productive, and hence, there can be a decline in the investment portfolio of Malaysia. All of this will eventually affect the exchange rate of the Malaysian Ringgit.
A rise in the exchange rate leads to a burden on both domestic traders as well as end consumers. More Ringgit will be required to make import payments which leads to a general price rise for imported commodities in the country. However, the government is taking necessary steps to combat any harsh effects. Also, Malaysia has shown a rise of 5% in economic growth in 2022 as compared to 2021.
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