Action needed to stop the slide in the value of the ringgit

Free Malaysia Today

The ringgit has been in decline over the past decade but the government is not entirely to blame. Market forces play a major role but fundamental changes can help to reverse the decline.  Read More:   Laporan Lanjut:   Free Malaysia Today is an independent, bi-lingual news portal with a focus on Malaysian current affairs.    Subscribe to our channel - http://bit.ly/2Qo08ry   ------------------------------------------------------------------------------------------------------------------------------------------------------ Check us out at https://www.freemalaysiatoday.com Follow FMT on Facebook: http://bit.ly/2Rn6xEV Follow FMT on Dailymotion: https://bit.ly/2WGITHM Follow FMT on Twitter: http://bit.ly/2OCwH8a  Follow FMT on Instagram: https://bit.ly/2OKJbc6 Follow FMT on TikTok : https://bit.ly/3cpbWKK Follow FMT Telegram - https://bit.ly/2VUfOrv Follow FMT LinkedIn - https://bit.ly/3B1e8lN Follow FMT Lifestyle on Instagram: https://bit.ly/39dBDbe ------------------------------------------------------------------------------------------------------------------------------------------------------ Download FMT News App: Google Play – http://bit.ly/2YSuV46 App Store – https://apple.co/2HNH7gZ Huawei AppGallery - https://bit.ly/2D2OpNP  #FMTBusiness #RinggitMalaysia #USDollar

Transcript

00:00 The ringgit has been in decline in the last 10 years.

00:03 In 2013, it was 2.95 ringgit to the US dollar.

00:07 That was the last time we saw it that high.

00:29 Blaming the government for the falling ringgit is a narrative we've all heard.

00:33 But the story is far more complex than a one-sided political blame game.

00:38 Currency exchange rates are relative.

00:40 As the US Federal Reserve raises interest rates to combat inflation,

00:44 investors find higher returns in US dollars.

00:48 This increases demand for the dollar

00:50 and simultaneously lowers demand for the ringgit.

00:53 With global economic growth expected to moderate,

00:56 the demand for safe-haven currencies like the US dollar or Singapore dollar will rise.

01:01 This is another blow to the value of our ringgit.

01:04 And when geopolitical tensions and economic performance

01:07 cause currencies like the Chinese yuan to dip, so does the ringgit.

01:12 But here's a crucial piece of the puzzle.

01:14 The ringgit is not always in freefall.

01:17 Market forces often bring about self-correction.

01:21 For instance, the ringgit appreciated against the dollar on cooling US inflation forecasts

01:26 as recently as March 31.

01:29 However, despite market corrections,

01:31 a weak ringgit has a negative impact on the average guy.

01:35 Import costs rises, pushing the costs of living up.

01:39 Since then, the ringgit has depreciated further to an all-time low in October 2023,

01:45 levels seen during the depths of the Asian financial crisis 25 years ago.

01:49 So how do we strengthen the ringgit?

01:52 Short-term measures like aggressive interest rate hikes

01:55 or market intervention are not suitable solutions.

01:58 This is because interest on loans will also rise.

02:02 This could potentially discourage business expansion

02:05 or deplete our international reserves.

02:08 No, the true solution lies not in treating the symptoms,

02:12 but addressing the root cause.

02:14 For example, if you wake up in the morning and you have some chest pains,

02:18 you go and see the doctor.

02:20 Unfortunately, the doctor tells you that you have an underlying heart condition.

02:24 Therefore, prescribing aspirin is not going to help.

02:28 You must treat your heart condition first.

02:31 A weak ringgit is a reflection of our economic productivity.

02:35 The decline in the value of the ringgit over the last five years is a call to action.

02:41 A call to restructure our economy,

02:43 to create products and services that the world demands.

02:46 A call to invest in our talent, in skills, in capacity building.

02:51 The government has been actively wooing foreign direct investment,

02:55 giving a boost to the economy.

02:57 However, for long-term prosperity,

02:59 measures are taken now to move away from cheap, labour-driven growth.

03:04 We need to attract high-value investments and promote innovation

03:08 and make our exports more competitive.

03:11 This will help to boost the value of the ringgit.

03:14 That is why the government has to restructure the economy,

03:17 prioritising sustainable growth over short-term fixes.

03:21 This is an opportunity to make a comprehensive reform

03:26 of the economy to restore the status quo as a leading Asian country.

03:31 Short-term pain will be expected under these measures to strengthen the economy.

03:36 We must act now before it's too late.

03:39 For us to break the psychological barrier of RM3 to US$1 exchange rate,

03:44 Malaysia needs to focus on the real goal.

03:47 A stronger economy, a stronger Malaysia, a stronger ringgit.

03:52 Hannah Kam, FMT Business.

03:55 [BLANK_AUDIO]

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