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Currencies |
| MALAYSIAN RINGGIT |
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| Introduction
| Overview | Structure
| History | Factors
affecting change in exchange rates | Daily
trend of Malaysian ringgit | Weekly
trend of Malaysian ringgit |
| Introduction |
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Ringgit is the word taken from the Malay language that means,
"jagged" or "anything that has rough or uneven
surface" and is the name given to the currency of Malaysia.
Previously, the word used to refer to the sharp edges of Spanish
silver coins that were widely exchanged in the country in the
past. The Malaysian ringgit, as it is called, was introduced in
1967 with the name "Malaysian dollar" and
"cent" in English language and "ringgit" and
"sen" in Malay language as the official monetary units.
The currency is still known as Malaysian dollar unofficially and
is usually denoted with the expression "RM" which stands
for "Ringgit Malaysia".
ISO 4217 regulation describes the currency
code i.e. MYR and numeric code i.e. 458 for Malaysian dollar. The
subdivision of the currency is "sen" that divide it into
100 equal parts.
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Overview
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Malaysian ringgit has been one of the few strong currencies in the
Asian continent. The country is one of the rapidly developing
countries in the world that is experiencing the phase of
industrialization. The currency of the country plays an important
part in the development as it had been strong for quite some time
and the policies of the central bank of the country that believes
in the keeping the ringgit’s exchange rate down rather than
supporting it.
When the Malaysian ringgit came into
existence, it was made to peg with the US dollar and with time,
the peg was removed. But in 1997, during the time of severe Asian
financial crisis, the currency was re-pegged to the US dollar at a
fixed rate regime @ RM3.80 to a dollar. The 7-year peg to the US
dollar has now been removed and the currency has been floated
against several major currencies of the world. The import and
export restrictions of the currency are like the import and export
of the local currency is free if the amount does not exceed 1000
ringgits. The import and export is free up till 10000 ringgits if
it is pertaining to the foreign currency in the country.
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Structure
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Malaysian ringgit, like most of the modern
currencies in the world, has coinage issues for
the smaller currency units and banknotes for the
larger denominations. One unit of the currency
is equally divided into 100 units of sen i.e.
the subunit of the currency. The second series
of currency coins has been used currently since
September 1989 in Malaysia and 5 denominations
are minted in this series i.e. 1 sen, 5, 10, 20
and 50 sens. Till 2005, RM1 coin was also being
used with other coins but it had to be withdrawn
out of circulation due to problems of forgery
and standardization. The obverse sides of all
the coins depict different images engraved on
them such as the 1 sen coin bear an image of
"Rebana ubi" i.e. a traditional drum,
5 sen coin shows an image of "gasing"
- a spinning top, 10 sen coin has an image of
"Congkak", a mancala board game, 20
sen coin shows an image of "sirih" and
"kapur" containers and a 50 sen coin
depicts "Wau", a Malaysian kite. The
reverse sides of the coins possess the bank
value and the year in which the coin was minted.
The first series of coins was issued in 1967
when the country switched over to its current
currency called Malaysian dollar at that time.
The ringgit bank notes are
issued in the 6 following denominations -
RM1, RM2, RM5, RM10, RM50,
RM100
Since the colonial times,
Malaysia has been using color code to
differentiate between the different notes of
different face values. The various colors/color
combinations for different ringgit currency
banknotes are mentioned below
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RM1 - blue
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RM2 - lilac
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RM5 - green
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RM10 - red
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RM50 - blue/gray
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RM100 - violet
The backsides of the notes
have images showing various sectors of the
Malaysian economy. The RM100 note symbolizes the
manufacturing sector, RM 50 bank note depicts
the mining sector, RM 10 note symbolizes
transportation sector, RM 5 bank note shows
image from country’s construction sector and
the RM2 note symbolizes the telecommunication
sector. Few commemorative bank notes have also
been issued on various occasions including an
RM50 polymer banknote. The production and
distribution of both coinage and banknote in the
currency is taken care of by the central bank of
the country i.e. Bank Negara Malaysia.
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| History |
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Malaysia has a long, deep and complex history in
context of the currencies that were used as a medium
of exchange in the country as it had been ruled by
numerous rulers that had their own currencies. The
country had seen many sorts of currencies, be it the
tin ingot money in which tin ingots were used as a
monetary unit or animal money in which coins were
minted in the shapes of various animals and insects
and also currencies of the Malacca Sultanate, coinage
of Kelantan and Johore, Kedah coins, Perils tin coins
and Terengganu Coins, until in the start of the 16th
century when Malaysia was attacked by the foreign
powers of that time. First the Portuguese laid their
hands on the country and started to mint their coins
followed by the Dutch and then the British.
Till 1837, Spanish silver dollars
were accepted as the legal tender in the country but
from then onwards it changed over to the Indian rupee.
Rupee served as the official monetary unit for 30
years and after that, silver dollars as a currency was
re implemented. In 1903, straits dollar were looked
upon as the official currency and it replaced the
silver dollar again. In 1963 the thirteen states got
united and soon after the union induced Malaysian
dollar replacing the straits dollar. The
responsibility to issue the new currency was given to
the newly established Bank Negara Malaysia. The
currency, until 1973, went along with the Singapore
dollar and the Brunei dollar as the exchange rate
between the three was maintained at par. The currency
of Malaysia was termed as Malaysian dollar in the
English language but Malaysian ringgit in the Malay
language, but in 1975, ringgit was adopted as the sole
name of the currency and it was pegged to the US
dollar @ 1 dollar = RM3.80.
The sign that was used for the
new currency i.e. "$" remained the same even
after change of name of the currency. "RM"
as the Malaysian ringgit symbol replaced the dollar
symbol in as late as in 1990s. The prevailing bank
note series in the country is the third one, which was
issued in 1996-1999, the prior series being withdrawn
from circulation. The first series was issued as and
when the currency was introduced in 1967. With the
adoption of new spelling system for the national
language i.e. Bahasa Malaysia, a new series of
banknotes were issued in 1982 with the new spellings.
This series even had some of the banknotes that are
not issued in the current series namely RM20, RM500
and RM1000 and had an identical design pattern like
the first series. The third series was issued in the
spirits of Wawasan 2020.
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| Factors
affecting the exchange rates between two countries
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The volatility in the foreign exchange rates
depends upon a numerous macro economic factors that
have different degrees of importance to different
economies of the world. Some special and exceptional
factors affecting the rates may also exist in the case
of different countries. Following are shown the common
factors on which the foreign exchange rate depends
- Flow of imports and exports between the
countries
- Flow of capital between the countries
- Relative
inflation rates
- Fluctuation limits on exchange rate
imposed by the governments of the countries
- Merchandise trade balance
- Rate of inflation in the country
- Flow of
funds between the countries for the payment of
stock and bond purchases
- Relative growth
- Short term
and long term interest rate differentials
- Cost of borrowings
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