Malaysia Financial Blogger | Financial Freedom Ideas | imDavidLee.Com

Ringgit Hits New High Against US Dollar

Ringgit Malaysia rose to a new 14-year high of RM2.9432/USD 1 on last Wednesday, July 27. In the other words, Malaysian just needs to pay RM2.94 to buy US$ 1. The appreciation of ringgit is due to the stronger economic fundamentals and better economic growth prospect.

I believe that the value of ringgit would further increase. This is because the US debt compared to GDP was still rising despite the end of the QE II. Besides that, there is speculation that Bank Negara Malaysia will raise the overnight policy rate (OPR) to curb inflation also. This will strengthen our ringgit value in the next couple months.

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Impact of the Increase in OPR

Bank Negara Malaysia raised the Overnight Policy Rate (OPR) by 25 basis points to 3% since last Friday. Following this, banks will increase the Base Lending Rate (BLR) sooner. So, for those who have variable loans especially housing loan will have to pay more in their monthly installment.

The reason for increasing the OPR is to cover the local inflationary pressures. The current inflation rate is about 2.9% and it is expected to continue to rise in latter part of the year. However, Bank Negara did a great job as they take pre-emptive action to push for economic growth before addressing the inflation issue.

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Ringgit Malaysia Past and Current Performance

The rising value of Ringgit has made buying items off the Internet much more cheaper. Recently, the ringgit closed at a new 13 year high against US dollar with the exchange rate of 2.96. It has taken more than a decade to strengthen below 3.00 against US dollar. Obviously, it is fully depend on US economy which brightened the outlook for exports.

As we can see that while the ringgit has strengthened against US dollar, it has weakened against euro, Australian dollar, pound and yen. If compared to last year 2010, the Ringgit Malaysia is one of Asia’s best performing currencies as it has appreciated by 9.2% against the US dollar, 11.94% against the British pound and 15.73% against the euro.

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Weaker US Dollar Against Ringgit

The Ringgit Malaysia went lower against the US dollar again. Do you think it is good news for those blogger who making money online? The Ringgit Malaysia is in between the 3.32 to 3.40 level against the US dollar this few weeks. Based on my personal finance analysis, the Ringgit was higher against the US dollar at 3.44 on the month of September while at 3.48 on the month of August.

At this moment, when the US housing market demand is decreasing, the job market is not that aggressive and consumer-spending power is lower; all these reason will cause the weaker US dollar.

I still remember last year, the value of the US dollar has fallen significantly and it hit the record of 30 years lowest. For me, this weaken US dollar also similar to two sides of coin, means that it also has its advantages and disadvantages. I am going to share with you the benefits only, as many people still remain negative thinking during recession nowadays.

Advantages of a Weaker Dollar

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