With a slowing global economy, an oversupply of oil and a whole load of drama happening with one of our government led investment funds; the value of our currency (the ringgit) has dropped to new lows.
Long gone are the days where the ringgit trades at a rate of around 3 to 1 to the US Dollar and 2.5 to 1 to the Singapore Dollar. Today, you’ll need more than RM4 to get 1 USD and RM3 to get 1 SGD.
Over time, we might have learnt to live with it. But how much has a weakened ringgit actually affected our daily lives as Malaysians?
Our Spending Power When We Travel
For one, we now feel the pinch more than before whenever we travel, especially to countries like Singapore, Australia, US and Europe.
As a result, most of us would have to resort to countries with a weaker currency than us like Vietnam or Cambodia for our yearly vacations simply because we cannot afford to shop and spend without cringing due to the higher exchange rate in more developed countries.
Read Also: What Is The Best Way To Spend Your Bonuses
The Price Of Imported Goods
While the cost of goods has always been steadily rising due to inflation, the weakening ringgit has made it worse since a considerable amount of goods that we buy are imported and traded in US dollars. Things like medicine, cars, and consumer goods are all affected.
Another example is the price of our favourite electronic gadgets such as Apple products.
A Macbook pro that used to cost only RM4,000 can now cost up to RM7,500! The same goes for other electronic products such as smartphones, television sets and home appliances.
Since the majority of the Malaysian middle class prefer to enroll in a foreign university or a foreign university affiliated degree program, the cost of tertiary education has also gone up considerably due to the weak ringgit.
Parents are forking out more and more for their childrens’ education and living expenses in foreign countries such as the UK, US and Australia.
Even for those enrolling in foreign university affiliated local universities, costs would have gone up because course registration fees and study materials are still charged in a foreign currency.
Our online subscriptions to US based products such as Dropbox, Netflix US, Microsoft 360 Suite and Adobe Creative Suite are now more expensive than ever.
If you run a blog or a technology firm, your domain and hosting costs on servers like AWS would also cost significantly more because they all charge in USD.
Increased Tourism Revenue
The upside of a weaker ringgit, however, is that it makes us a more affordable and attractive destination for tourist. In turn, it will boost our tourism revenue and benefit certain sectors of the economy.
Value Of Investments Overseas
While a weaker ringgit makes it harder for us to invest overseas, it is good news for existing investors who see the value of their offshore investments rise higher when viewed in ringgit due to the added margin caused by a weak ringgit.
Our Exports Become More Competitive
As our currency weakens, our export industry does better as our products become more competitive. However, such profits are often all kept by the owners of such export driven businesses and seldom passed down to the employees and the common man.
As a whole, a weak ringgit usually translates into a higher cost of goods and a higher cost of living for the average Malaysian. Hence, let’s hope that the ringgit recovers its value soon.
DollarsandSense is a website that aims to help people make better financial decisions, one interesting bite-sized article at a time. Like us on Facebook to stay in touch with our latest article.
DollarsAndSense Malaysia is a website that aims to help people make better financial decisions, one interesting, bite-sized article at a time. Like us on Facebook to stay in touch with our latest articles.