Economic Highlights, Precious Metal Investment 
2 Comments Depreciation of Malaysian Ringgit?
Recently, a lot of people mentioned about depreciation of Malaysian Ringgit, and many people shared photos about this matter. This drives me to do some simple researches.
To find out whether a currency is depreciating, we can only determine my comparing against other currencies. In general, all paper currencies are fiat currencies and by nature, they’re always falling in value because of federal reserves printing. The only thing we can do is comparing the exchange rate and determine how much other currencies you can buy with your country’s currency.
First of all, let us look at USD.
Starting from March 2012, our currency is depreciating against USD. Despite what are happening in US such as the massive currencies printing, MYR seems depreciating more than USD does.
The next one would be GBP.
Since March 2012 too, MYR was depreciating against GBP but recently because of the crisis happening in Eurozone, the GBP currency is affected and depreciated more as compared with MYR. However, right now, in average, we still buy less of their currencies compare with years before.
EUR is one of the currency that depreciated against MYR, due to the debt crisis in Eurozone.
MYR is appreciating against EUR and it’s believed that the Euro Dollar is going to continue falling. Several news have mentioned that Greece is likely yo quit Eurozone. The economic downturn of the whole Eurozone will affect countries which export goods and services to them.
Have a look at AUD.
MYR is appreciating against AUD during February to May but depreciating against AUD since May 2012.
What about MYR to SGD?
It’s pretty obvious. Malaysian Ringgit is depreciating against most of the currencies. However, what is the main reason that caused MYR to depreciate? Is it because our currency is devaluing more than other currencies do? In certain extents, I believe this is one of the major reasons. Another factor would be the economic growth of Malaysia is slower than countries such as Singapore.
There are also news publication mentioning that Malaysian Ringgit’s depreciation has hit the 14 years lowest.
In my opinion, the next global economic crisis is definitely a currency crisis, whereby people will no longer demand paper fiat currencies because its value is coming all the way down. This will cause deflation because the paper currencies circulating in the market fall tremendously, and we can see the federal reserves will start printing paper currencies and push the market (this is happening is Japan right now!), causing hyperinflation!
Robert Kiyosaki spoke in National Achiever Congress and predicting that there will be a currency collapse in 2016. Right now he’s investing a lot in silver and oil. I always believe that commodities such as gold, silver and oil are good asset class to invest because every time when the value of currencies go down causing inflation, the price of commodities will go up.
I’ve founded Silver4u Malaysia that provide financial education and retailing of physical silver. Investors can now buy and invest silver in Malaysia with us and get prepared for the upcoming currency crisis and hyperinflation!
Good analysis, for my understanding, floating currencies are determine by supply and demand, as you mention if Reserve keep printing paper money, that’s mean increase in supply that will affect its value against other currencies. For the Ringgit depreciation against SGD, I was not that surprising after all. This simply mean investors preferred to exchange Ringgit for SGD dollar more than the other way around. With economic slowing down and general election looming, investors may want to diverse political/currency risk somewhere else, or maybe the worse case, Bank Negara is printing more money that ever to pay back its Federal debts which doubled in the past 8 years or so.
Maybe that’s some of the reason.
Thanks for your comment. Yes, I agree. Federal reserve printing, supply and demand of MYR as well as economic slowdown that causes by election are the general factors that make MYR depreciated against mother currencies.