Malaysian Ringgit

The Malaysian Ringgit (MYR), symbolized as RM, is the official currency of Malaysia. It is subdivided into 100 sen (cents). The issuing authority is the Central Bank of Malaysia, known as Bank Negara Malaysia.

The ringgit’s history is intertwined with the broader economic development of Malaysia. Before its official naming, the currency was commonly referred to as the “Malaysian dollar,” reflecting the region’s historical connection to the British Straits dollar. In August 1975, the official name was changed to “Ringgit,” which means “jagged” in Malay, referring to the serrated edges of the silver Spanish dollars that were widely circulated in the region during the colonial era. The “Sen” replaced “cents” to further distinguish it as a unique Malaysian currency.

The early years of the ringgit saw it pegged to various currencies, including the British pound and later, a basket of currencies. However, the Asian Financial Crisis of 1997-98 significantly impacted the Malaysian economy and the value of the ringgit. In response to the crisis, Malaysia implemented capital controls and pegged the ringgit to the US dollar at a rate of RM3.80 per USD. This peg was maintained until July 2005, when Bank Negara Malaysia decided to float the ringgit, allowing its value to be determined by market forces.

Since the float, the ringgit’s value has fluctuated based on factors such as global economic conditions, commodity prices (especially oil, a major export for Malaysia), interest rate differentials, and investor sentiment. Bank Negara Malaysia actively manages the ringgit through various monetary policy tools to ensure its stability and promote sustainable economic growth. This management includes intervening in the foreign exchange market to smooth out excessive volatility.

The ringgit is used for all transactions within Malaysia. While it is not a widely traded currency on the international market compared to major currencies like the US dollar, Euro, or Japanese Yen, it plays a crucial role in regional trade and investment, particularly with neighboring countries in Southeast Asia. Non-resident banks need permission from Bank Negara Malaysia to deal in Ringgit.

Malaysian banknotes are available in denominations of RM1, RM5, RM10, RM20, RM50, and RM100. Coins are issued in denominations of 5 sen, 10 sen, 20 sen, and 50 sen. The designs on both banknotes and coins often reflect Malaysia’s rich cultural heritage, national symbols, and economic achievements.

The performance of the ringgit is closely monitored by economists, investors, and policymakers as it provides insights into the health and competitiveness of the Malaysian economy. Its stability and strength are essential for attracting foreign investment, facilitating trade, and maintaining price stability within Malaysia.