Why Malaysia’s Currency Has Been Falling: Can The Ringgit Recover? | Insight | Full Episode
CNA Insider・30 minutes read
Malaysians face price hikes due to the falling Ringgit, impacting businesses and workers, leading to concerns about trust in the government and cost of living. Remote work rises as individuals like Eliza Abdul Rahim become more cost-conscious, impacting purchasing decisions and favoring local brands amidst imported inflation and rising food prices, while the government implements policy tools to mitigate effects and enhance economic competitiveness.
Insights
- The falling Ringgit in Malaysia due to economic factors like the US Federal Reserve's interest rate hikes impacts individuals and businesses, leading to cost-conscious behavior, affecting purchasing decisions, and causing concerns about the cost of living and trust in the government.
- The Malaysian government is taking steps to mitigate the effects of the Ringgit's depreciation through policy tools like targeted subsidies and structural reforms to enhance competitiveness, attract investments, and address issues such as brain drain and low wages for long-term economic stability, aiming to boost public confidence and approval ratings while anticipating a gradual recovery and potential appreciation of the currency in the future.
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Recent questions
How does the falling Ringgit impact Malaysians?
The falling Ringgit impacts Malaysians by causing a price hike, affecting businesses, workers, and individuals like Eliza Abdul Rahim. It raises concerns about the cost of living, government trust, and leads to imported inflation. The weak currency influences purchasing decisions, favoring local brands, and contributes to rising food prices, impacting families like cameraman Shanmugam Karupan's. Additionally, the Ringgit's depreciation affects outward migration, expatriates, and individuals sending money abroad, creating challenges for various sectors of society.
What factors contribute to the Ringgit's depreciation?
The Ringgit's depreciation is influenced by various factors, including the exchange rate with the Singapore Dollar affecting workers' decisions, the US Federal Reserve's interest rate hikes against the US Dollar, and geopolitical events like the Ukraine invasion. The Central Bank's resistance to significant interest rate hikes aims to maintain economic growth and manageable inflation, while uncertainties regarding the Federal Reserve's adjustments and geopolitical risks could further impact the currency's value.
How does the falling Ringgit affect expatriates in Malaysia?
The falling Ringgit affects expatriates in Malaysia by impacting their salaries, cost of living, and financial stability. The weak currency leads to challenges in managing expenses and may deter returnees considering the high inflation and currency depreciation. However, the low Ringgit can attract expatriates due to cost savings, making Malaysia an appealing destination despite the economic challenges posed by the currency's depreciation.
What measures is the government taking to address the Ringgit's depreciation?
The government is implementing policy tools to address the Ringgit's depreciation impact on living costs, including targeted subsidies and database registration for assistance. Structural reforms are deemed necessary to enhance competitiveness, attract high-quality investments, and address issues like brain drain and low wages for long-term economic stability. These measures aim to mitigate the effects of the weak currency on various sectors of society and promote economic growth and stability.
How does the Ringgit's depreciation affect Malaysia's economy?
The Ringgit's depreciation affects Malaysia's economy by impacting businesses reliant on imports, leading to higher costs and the need for repatriation of foreign earnings. The weak currency influences tourism, boosting domestic tourism while deterring Malaysians from traveling overseas. The falling Ringgit also has political implications, with criticisms of governance affecting public confidence and approval ratings, potentially leading to political issues if salaries remain low and job opportunities are scarce. The government anticipates the currency to recover gradually, with the possibility of appreciation if the United States reduces interest rates, aiming to stabilize the economy and restore public trust in governance.
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Summary
00:00
Malaysians Struggle with Falling Ringgit Impact
- Malaysians are facing a price hike due to the falling Ringgit, impacting businesses and workers.
- The exchange rate between the Ringgit and Singapore Dollar affects workers' decisions to work in Singapore.
- The falling Ringgit raises concerns about the government's trust and the cost of living.
- Remote work has become common due to the economic situation, affecting individuals like Eliza Abdul Rahim.
- Eliza, an M40 income earner, has become more cost-conscious due to the Ringgit's depreciation.
- The Ringgit's value has dropped significantly, impacting purchasing decisions and favoring local brands.
- The weak Ringgit leads to imported inflation, worsened by geopolitical events like the Ukraine invasion.
- Rising food prices affect individuals like cameraman Shanmugam Karupan, impacting his family's meals.
- The US Federal Reserve's interest rate hikes contribute to the Ringgit's depreciation against the US Dollar.
- Malaysia's Central Bank resists significant interest rate hikes to maintain economic growth and manageable inflation.
20:30
"Ringgit's Depreciation Impact on Malaysia's Economy"
- Haizi, who left Malaysia 18 years ago, is considering returning despite financial concerns due to high inflation and currency depreciation.
- The impact of the Ringgit's depreciation on outward migration may deter returnees, especially if salaries are denominated in Ringgit.
- Expatriates in Malaysia face challenges due to the Ringgit's depreciation, affecting their salaries and cost of living.
- The government has reactivated PUDA to enhance Malaysia's business competitiveness in 2023, with over 150,000 expatriates contributing to the economy.
- A low Ringgit can attract expatriates due to cost savings, making Malaysia an appealing destination.
- Rahila Ali sends money to her son studying in the UK, facing challenges due to the Ringgit's depreciation.
- The weak Ringgit deters Malaysians from traveling overseas but boosts tourism in Malaysia, attracting more tourists.
- Tourism in Malaysia has rebounded, with hotel occupancy reaching high levels, but staff recruitment remains a challenge.
- The Ringgit's depreciation affects businesses reliant on imports, leading to higher costs and the need for repatriation of foreign earnings.
- The falling Ringgit has political implications, with criticisms of governance affecting public confidence and approval ratings.
41:38
Currency Depreciation Impact on Living Costs
- The depreciation of the currency affects the cost of living, potentially leading to political issues if salaries remain low and job opportunities are scarce. The government anticipates the currency to recover gradually, with the possibility of appreciation if the United States reduces interest rates.
- The Malaysian ringgit is currently considered undervalued by the central bank and some economists, with expectations for it to appreciate in the future. However, uncertainties regarding the Federal Reserve's interest rate adjustments and geopolitical risks could impact the currency's value.
- The government is implementing policy tools to address the depreciation's impact on living costs, including targeted subsidies and database registration for assistance. Structural reforms are deemed necessary to enhance competitiveness, attract high-quality investments, and address issues like brain drain and low wages for long-term economic stability.
