Malaysian Ringgit (MYR) is known to be the official currency of Malaysia. It is issued by the Central Bank of Malaysia. The Ringgit is a relatively young currency that was introduced in 1967, replacing the Malaysian dollar, the abbreviation for the currency is RM while the currency code is MYR. The word ringgit means jagged derived from Spanish coin that was commonly used in the Malaysian region between the 16th and 17th century.

History of Malaysian Ringgit (MYR)

Before the introduction of the Ringgit, Malaysia used the Malayan dollar. This currency was pegged to the Pound Sterling, reflecting the colonial ties of the region. However, as the country sought economic independence and a new currency was introduced 

The Ringgit’s early years experienced significant economic growth, particularly during the 1970s and 1980s. The main drivers of this growth was exportations of Product and services Produced in the country led to the emergence of key industries like electronics and the manufacturing industry.

However, the Asian financial crisis of the late 1990s hit Malaysia hard, causing the Ringgit to depreciate significantly. The government implemented capital controls and different measures to make sure the currency and the economy is stabilized

Denominations of the Malaysian Ringgit (MYR)

The Ringgit is divided into 100 Sen. It is issued in denominations of 1, 5, 10, 20, 50, and 100 ringgits. Both banknotes and coins are used in Malaysia. To help reduce the rate of money laundering in the region, authorities removed denominations like 500 and 1,000. The ringgit is used and also accepted in countries bordering Malaysia, like Thailand, the Philippines, and Vietnam.

The Exchange Rate of the Malaysian Ringgit (MYR)

The exchange rate of the Ringgit fluctuates based on various economic factors, including global economic conditions, domestic economic policies, and geopolitical events. As a result, the value of the Ringgit can vary over time. The currency dropped to 3.8 in 2005 after being pegged. It fell further to 3.73 in 2009. Between 2013 and 2016 MYR grew to to a value of 4.47 per USD.

The Economy of Malaysia

Malaysia’s economy is a diverse mix of agriculture, manufacturing, and services. In 1990s the high volatility in the Malaysian currency caused by  Asian financial crisis left the central bank of Malaysia (Bank Negara) with no choice that to peg the ringgit to USD at the rate of 3.80 and because of the raise in capital outflows because of the financial crisis trading ringgit outside Malaysia was banned. in 2005, The Ringgit surge so high in value than currencies like the USD, HKD, and the Chinese renminbi. Malaysia’s economy has experienced economic growth over the past few decades. 

Key sectors contributing to Malaysia’s economy include:

Malaysia is a major exporter of palm oil, rubber, and timber. It also exports crude oil, refined petroleum, and natural gas.5 “Economy of Malaysia.”

Manufacturing: Electronics, electrical goods, and automotive components are major exports.

Services: Tourism, finance, and telecommunications are important service sectors. 

Challenges of Malaysian Ringgit (MYR)

Despite its strengths, the Malaysian ringgit faces several challenges:

Global Economic Uncertainty: Global economic fluctuations can impact the ringgit’s value.

Commodity Price Volatility: As a major commodity exporter, Malaysia is vulnerable to price swings in commodities like palm oil and rubber.

Geopolitical Risks: Regional tensions and global conflicts can also affect the Ringgit.

Domestic Economic Issues: Issues like inflation, unemployment, and government debt can impact the currency.

Conclusion

Malaysian Ringgit is a vital part of Malaysia’s economy. Its history, denominations, exchange rate, and the factors influencing its value are crucial to understanding the country’s economic landscape. The Malaysian currency is not pegged to the U.S. dollar. It has been a floating currency since 1995.

While the Ringgit has faced challenges, Malaysia’s strong economic fundamentals and diversified economy position it to weather these storms and continue its growth trajectory.