Malaysians planning for trips abroad, even within the region, will feel a pinch after a visit to the money changer.
The Ringgit, which suffered due to falling crude oil prices, became Asia’s worst performing currency against the US dollar in January. While it has been showing some signs of recovery, the currency market has pushed up the cost of overseas holiday and the price of imported goods for Malaysians.
Conversely, the Thai baht had advanced 13.2% over the past six months. At 8.97 in the last week of February, the baht is at its most expensive against the Ringgit since 2007.
Hong Kong has become 15% more expensive since August last year. The Hong Kong dollar is pegged to the US dollar, against which the Ringgit had weakened to 3.647 in late February, before the market closed for the Chinese New year holidays.
Jakarta would be a cheaper destination if you look at it from a currency standpoint alone. This is because the Rupiah performance was tempered by Bank Indonesia’s unexpected interest rate cut in February. At the current exchange rate, you can get around 3,500 Rupiah for one Ringgit. Six months ago, one ringgit would buy you 3,650 Rupiah.
As the Ringgit performance is locked to oil prices, expect more volatility ahead. But all is not gloom and doom. The weaker Ringgit, driven largely by falling price of crude oil, might help buffer the economy from job losses and a slowdown in growth.