The currency valuation of a country often shows the nation’s economic status. The inflation or deflation rate of local money highly depends on the economic stability of that nation. When considering Malaysian currency evaluation, the status seems to be pretty stable for last 2 decades. It is an undoubtedly a remarkable track achievement as far as steady national economic growth is concerned.
This stability in Malaysian money seems certain, thanks to the regular intervention into the national stock exchange and other financial correspondence which goes through the nation’s policy. In spite of stability in last two decades, there were major devaluations before that due to bad loans and poor policies.
So, if we look at the past records, we can see that the exchange rate of Malaysia, between US dollar and Malaysian ringgit was slowly getting wider with time, until the mid of 1998, when things got interesting. We will go deep into the currency evaluation of Ringgit against the US dollar and find out reasons behind money valuation and revaluation throughout the time.
Analyzing the timeline of Malaysian Ringgit
The rate of Malaysian money was first floated at 1973 when Ringgit rate was fixed at around RM 2.45 per 1 USD. The government at that time kept their focus on the currency exchange rates at regular intervals and introduced liberalization at monetary regulations.
A slight raise of RM 2.48 against 1 US dollar was seen during the year 1985. This currency exchange rate remains unchanged for quite a long period of time. However, currency devaluation stuck in Malaysia during the 1997 Asian economic recession. During this time the inflation rate took a steep peak of 17 percent. Nevertheless, Malaysia handled the situation pretty well.
The nation had comparatively less impact during crisis, thanks to its high rate of savings policy that government undertook to withstand the economic downfall. This savings rate was about 40% of the nation’s GDP, which counted the highest in any the world.
On the other hand, to create this savings policy and withstand the financial crisis, the nation took huge loans, which is about 170% of GDP, from global sources and invested on the booming property market and stock exchange in Malaysia.
But the real crisis stuck the nation due to huge bad loan acquired by politically influenced businessmen connected to these real estate and stock exchange sector. This corruptions in nation pulled down Malaysia’s financial status once again.
The Malaysian currency rate which was RM2.55 against 1 USD at that time faced a huge plunge down during 1997 Asian financial crisis. Even booming business sectors like real estate and stock exchange in Malaysia had to face this crisis.
From RM2.55 against 1 USD on 1997, the rate shoots up to RM3.75/ USD on 1998. This currency inflation got even worse in August 1998 when the difference went to an alarming rate of RM4.2 per US dollar. It was definitely a huge blow to the Malaysia’s financial sector.
Following table shows the rate of currency exchange in Malaysia against American dollar in between the year 1996 to 2001:
|Year||RM exchange rate per USD$1|
The USD$1 to RM 3.80, USD to Malaysia currency exchange rate was continued till the first trimester of the year 2001, until the peg rate set by the Malaysian government has been finally withdrawn. The RM 3.80 cap was kept stable for years in fear of facing possible global financial crisis. Later on, this peg rate was lifted with an assurance of strong global market positions that Malaysia has been seeing till now.
The recovery story of Malaysian money
When the currency exchange of Malaysia was at an alarming condition during the last trimester of 1998, Malaysian government took some emergency measures to handle the downfall. On September 1998 the nation’s authority introduced several currency exchange control policies. The aim of these measures is to pull up the ringgit value to RM3.80 per USD.
To achieve this ambitious target, Malaysian government started scrutinizing the stock exchange market of Malaysia. Then they red-marked the major bad loan receiver bodies and froze further loan issuances. Next, the government of the nation halted all possible channels of offshore currency transfer and froze all possible asset returning and selling opportunities for foreign business owners in Malaysia for a year.
The authority also restricted tourist allowance to maximum RM500, which an individual Malaysian traveler can carry as cash money when traveling to other nation. The International Monetary Fund or IMF criticized those initiatives, but that couldn’t stop this policy. Furthermore, Malaysia came out from IMF’s umbrella and cut out all financial supports of IMF. The end result is however, positive for Malaysian economy.
The key focus is to lower down international debts, which was slowly becoming a possibility. The debt started going low at around USD 42 billion, which is 59% of total Malaysian GDP. To support the non-performing loans (NPL) which was necessary to run and re-strengthen authentic businesses in Malaysia, the government established an asset-managing company.
By the mid of May, 2000, this asset-managing company alone accumulated more than 40% of non-performing loans or about $9.60 billion. This further improved the money exchange rate of Malaysia. Lastly, the government distributed about $2 billion USD to 10 banking organizations in this nation to propel their business. Such initiatives boosted the recovery rate of Malaysia money scenario.
The scenario of currency exchange of Malaysia has shown a recovery from the beginning of year 2000. So, Malaysian government liberalized some financial bodies to pump up economy and commerce of the nation. The wise initiatives kept the debt level low in the nation and kept the exchange rate of Malaysia with American dollar at a stable rate for past couple of years.
Currently the nation is at a rapid growth in place of commerce and economy. Of course, the peg of RM 3.80 against USD$1 went obsolete long times ago. The Malaysian Ringgit is currently at a rate of RM 4.21 per USD$1.
However political turmoil in recent times put impacts on recent Malaysian currency. But until now, the up growing trade and commerce assure strong monetary stability. Unless there is some sudden national, political or environmental emergency, the Ringgit exchange rate in Malaysia against USA doesn’t have a reason to fall low in near future.
Lastly, Malaysian currency went through a long turmoil after the currency got an international recognition. However, recent scenario has changed quite a bit. Malaysian currency exchange rate is still at a respectable valuation when compared with US dollar. When seeing the economic status of this nation, the monetary forecast shows good competitions and further valuation of its currency state.
The nation’s only stock exchange which is in Kuala Lumpur assures healthy investments and turnovers, once again, this might come up to be a positive influence for strengthening the Malaysian money against global currencies.
What is the recent exchange rate of US dollar to Malaysian Ringgit?
The current exchange rate of USD to Malaysian RM is USD$1= RM0.241449. This rate is subjected to change every day.
What is RM stands for?
Ringgit Malaysia. Also used as MYR. It is used to refer Malaysian currency, which is used on the prefix of currency amount in Malaysia.
Which nation has RM currency?
Malaysia. RM is the abbreviation of Ringgit Malaysia.
What is the recent exchange rate of RM against US dollar?
The recent market exchange rate is RM4.21 for USD$1.