Malaysian ringgit

2008/9 Schools Wikipedia Selection. Related subjects: Currency

Malaysian ringgit Ringgit Malaysia (Rumi) ريڠڬيت مليسيا (Jawi Malay)
100 ringgit
ISO 4217 Code	MYR
User(s)	Malaysia
Inflation	3.8%
Source	The World Factbook, 2006 est.
Subunit
1/100	sen
Symbol	RM
Coins	1, 5, 10, 20, 50 sen
Banknotes	RM1, RM2, RM5, RM10, RM50, RM100
Central bank	Bank Negara Malaysia
Website	www.bnm.gov.my
Mint	Royal Mint of Malaysia
Website	royalmintmalaysia.com or www.royalmint.com.my

The ringgit (unofficially known as the Malaysian dollar), is the currency of Malaysia. It is divided into 100 sen (cents) and its currency code is MYR (Malaysian Ringgit). The ringgit is issued by the Bank Negara Malaysia.

Etymology

The word ringgit means "jagged" in Malay and was originally used to refer to the serrated edges of silver Spanish dollars which circulated widely in the area. The Singapore dollar and the Brunei dollar are also called ringgit in Malay (although currencies such as the U.S. and Australian dollars are dolar), hence its official abbreviation RM for Ringgit Malaysia.

The Malay names ringgit and sen were officially adopted as the sole official names in August 1975. Previously they had been known officially as dollars and cents in English and ringgit and sen in Malay, and in some parts of the country this usage continues. For example, in Malaysia one ringgit is "one dollar" in English and "tsit⁸-kåu·¹" (一塊/一块) in Teochew. In the northern states of Peninsular Malaysia, denominations of 10 sen are called kupang in Malay ("poat⁸" in Hokkien), e.g. 50 sen is 5 kupang.

History

On June 12, 1967 the Malaysian dollar replaced the Malaya and British Borneo dollar at par. The Malaysian dollar was issued by the new central bank, Bank Negara Malaysia. In November 1967, the British pound was devalued by 14.3%. The new currency was not affected but earlier notes of the Malaya and British Borneo dollar were still pegged to sterling at 60 dollars = 7 pounds and, consequently, these notes were reduced in value to 85 sen per dollar.

Until June 23, 1973, the Malaysian dollar was exchangeable at par with the Singapore dollar and Brunei dollar. The Monetary Authority of Singapore and the Brunei Currency and Monetary Board still maintain the exchangeability of their two currencies.

The use of the dollar sign "$" (or "M$") was not replaced by "RM" (Ringgit Malaysia) until the 1990s, though internationally "MYR" (MY being the country code for Malaysia) is more widely used.

Coins

First series

On December 7, 2005, the RM1 coin was demonetised and withdrawn from circulation. This was partly due to problems with standardization (two different versions of the coin were minted) and forgery.

Three denominations of gold bullion coins, the "Kijang Emas" (The kijang (a species of deer) is the official logo of Bank Negara Malaysia) are also issued, at the face value of RM 50, RM 100 and RM 200. It was launched on July 17, 2001 by Bank Negara Malaysia and minted by Royal Mint of Malaysia Sdn Bhd. The purchase and reselling price of Kijang Emas is determined by the prevailing international gold market price.

In 2007, the government announced that on April 1, 2008, the 1 sen coins will no longer be in use. This is due to the implementation of rounding of prices to the nearest 5 sen.

Exchange rate

Between 1995 and 1997, the ringgit was trading as a free float currency at around 2.50 to the U.S. dollar, before dipping to under 3.80 to the dollar by the end of 1997, following the year's East Asian financial crisis. For the first half of 1998, the currency fluctuated between 3.80 and 4.40 to the dollar, before Bank Negara Malaysia pegged the ringgit to the U.S. dollar in September 1998, maintaining its 3.80 to the dollar value for almost seven years. The ringgit lost 50% of its value between 1997 and 1998.

On July 21, 2005, Bank Negara announced the end of the peg to the U.S. dollar immediately after China's announcement of the end of the renminbi peg to the U.S. dollar. According to Bank Negara, Malaysia allows the ringgit to operate in a managed float against several major currencies. This has resulted in the value of the ringgit rising closer to its perceived market value, although Bank Negara has intervened in financial markets to maintain stability in the trading level of the ringgit.

After the end of the currency peg, the ringgit appreciated to 3.34 to the U.S. dollar since mid-2005. The ringgit has also appreciated against the Hong Kong dollar (HKD) (0.49 to 0.42 to the MYR) and the renminbi (CNY) (0.46 to 0.45 to the MYR), although its value against the renminbi has been volatile.

However, following a downward trend of the U.S. dollar's value, the ringgit depreciated against other currencies between December 2001 and January 2008, including the Singapore dollar (SGD) (2.07 to 2.29 to the MYR), the Euro (EUR) (3.40 to 4.83 to the MYR), the Australian dollar (AUD) (1.98 to 2.90 to the MYR), and the British pound (GBP) (5.42 to 6.49 to the MYR), as of January 3, 2008.