International Financial Mangement - Ringgit Malaysia Currency

Zunaira (2015) stated that even though Ringgit Malaysia currency can be improved by the next year  but still it need to facing so many issues including worst performing of crude oil also politic issues regarding 1Malaysia Development Berhad (1MDB).  Currency actually very sensitive to certain issues like politic uncertainty in the country also when there is a problem if the crude oil  prices falling down.  It was stated by Suhaimi Ilias who is Maybank  Investment Bank  Group Chief Economist that the Ringgit might be around 4.20-4.30 level in the first-half year as the movement of ringgit not be as volatile as the current year,2015. So, it could be less possibility to the depreciate the value of the our currency.  He also stated that in the condition of falling crudes oil prices, it would led to the bigger deficit that automatically affected the value of Ringgit Malaysia (RM). As for budget 2016, government already estimated that  an average of crude oil price is US$48 per barrel while the price of global benchmark Bret approximated that the price is around US$36-US$38 per barrel. Suhaimi added that by stabilizing current account surplus that coming from a still-healthy trade surplus can support the ringgit despite the dissipating political risk that associated with 1MDB.

But as what said by John Hopkins University’s Eni Professor of international economics, Michael Plummer that the currency could be traded in a 10 percentage-point range in a short term. Regarding the issues and speculative that spread about Trans Pacific Partnership (TPP) agreement, both Plummer and Suhaimi said it would be a positive impact as it would boost to business confidence among the consumer as compared to the last year where the consumer and business confidence is weakened due to uncertain external and domestic environment.

In a nutshell, there are so many factor that could led to falling of currency where it would be different to one country and another country. It could be causes of politics uncertainty or it might be because of speculation made by speculators that makes the currency drops. Of course everything have its pro and cons as the good side when the currency is falling down or facing depreciating , the export trading business would increase and automatically increase the business growth in the country. But , of course when the currency start to falling down, central bank would do their job to stabilize the currency back by using their monetary tools.

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