Why is the value of the ringgit falling?

How low has the ringgit fallen?

Before closing on 3 December 2014, the ringgit dropped to as far as 3.4455 to the US dollar – the weakest it had been since February 2010.

In the first quarter of 2015, the ringgit’s value continued to weaken. On 11 March 2015, the ringgit traded at 3.7105 to the dollar. The Malaysian Insider reported that there was the perception of a “looming crisis”, with the value of the ringgit being close to 1997 levels.

On 8 June 2015, the ringgit dropped to 3.7743, the lowest since January 2006. On 9 June 2015, it fell to its lowest value against the Singapore dollar in 30 years, trading at RM2.77 to the Singapore dollar.

On 6 July 2015, it was reported that the ringgit had dropped to its lowest level in 16 years, falling to 3.81 to the US dollar. When the ringgit was pegged to the dollar in the aftermath of the Asian Financial Crisis of 1997, it was set at 3.8.

On 12 August, the ringgit fell to RM4.0025 against the dollar, the lowest in 17 years.

What caused the drop in the ringgit's value?

A combination of several factors:

- Firstly, the lower value of oil. As oil is one of Malaysia’s main exports, the declining price of Brent crude oil of 38% from its June 2014 high is affecting the currency.

- As questions over Malaysia’s 1MDB debts have gained global attention, this has also affected confidence in the ringgit. Former Finance Minister Tun Daim Zainuddin was one of those who blamed the 1MDB financial debacle. However, those defending 1MDB also blamed the former Prime Minister Tun Dr. Mahathir Mohamad’s criticism of the government for the weakening currency.

- In July 2015, media reports that Prime Minister Najib Razak’s personal accounts were involved in the transfer of USD700 million of 1MDB money have caused further weakening of confidence in the currency.

- The falling value of the ringgit in June 2015 has also been attributed to the prospect of the US increasing its interest rates.

- On 11 August 2015, China devalued its currency which caused other Asian currencies to suffer and pushed the ringgit down further, as the devaluation of the yuan strengthened the dollar.

Currency in Malaysia at 14 September 2015

So as Malaysians, we should work together and strive to improve our national currency since most countries do not receive any ringgit from Malaysia for example Egyptian and China.