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5 Ways the Falling Ringgit Is Affecting YOU, the CONSUMER

BY Nisya Aziz

Updated 21 Nov 2022




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Our ringgit has been falling against the US dollar. As we’re writing this article, the current Malaysian currency rate is at US$1 = RM4.72 (as of 9 November 2022). The Malaysian Reserve reported that this is mainly caused by the weakening of the US dollar, the reserve currency of the world. And the United States, like the European Union, is in a Catch-22 situation. The massive sanctions imposed on Russia not only harm Russia but also trigger an unprecedented spike in energy and food prices, resulting in galloping inflation not seen in many years.

So what does the falling ringgit mean to us, the rakyat? How is it affecting our everyday lives?

Most of the time, the first thing that comes to mind is costly overseas travel. But, that’s not a “bad thing” because it’s not a necessity. And, if you die die have to travel, you can always use BigPay for better exchange rates. Or, just resort to countries with weaker currency than us - even better, travel domestically. #cuticutimalaysia

That aside, here are 5 other ways the falling ringgit is affecting you as the consumer.
 

What's covered in this article?


1. Don’t be shocked by your increasing groceries expenses.




Since our ringgit is falling, it makes import price higher. FYI, Malaysia is still a net importer of food, rather than a self-reliant food producer. One example of imported food is beef. Malaysia's beef imports are limited to only a handful of countries such as India and Australia, while domestic production is almost non-existent.

According to Department of Statistics Malaysia, for the last ten years, the index of foodstuff and feedstocks increased by 24.4 percent. Most feeding stuff for animals was imported mainly from Argentina, while fertilizers, were from Canada and China. This explains why our food items like fruits, vegetables, and infant formula getting costlier.  As Malaysians, this is a bummer because we live to makan, you know. 
 

2. Parents need to fork out more monies for education.




According to The Star, a whopping 88% of Malaysian parents would consider sending their child overseas to pursue their tertiary education. Well, if you’re one of those parents, be financially prepared because the cost of tertiary education has also gone up considerably due to the weak ringgit. You also need to think about living expenses in foreign countries.

If you’re planning to enrol in a local university that’s affiliated with a foreign university, you might want to relook into the fees again because the course registration or study materials might be charged in foreign currency.
 

3. You have to pay more for online subscriptions.




By now you should get the drill - if you purchase things/ services from foreign companies, you’ll have to pay more. For example products like Steam, Dropbox, Mailchimp, Adobe Creative Suite, Amazon Prime or Pornhub Premium, just to name a few. They're going are going cost you significantly more than before because they’re charged in USD. Also, soon you’ll be charged with digital tax

Aside from that, if you’re a frequent online overseas shopper, it’ll reflect immediately because of the fluctuating exchange rates.
 

4. If you’re earning in USD, you’re making good money




If you’re selling things/services internationally or working abroad, you’d be affected positively because you’re making money in international dollars. Even better when it’s online because of the cost of doing the business is still cheaper.

And, if you’re not, you can start earning too by offering valuable skills internationally like accounting, graphic designing, digital marketing, writing and more on websites like Upwork.com or Freelancer.com. But, take note that these websites charge a commission for every job you take up. 
 

5. Need a loan? This is not a good time to get one.




Recently, Bank Negara Malaysia (BNM) has decided to raised the overnight policy rate (OPR) AGAIN by another 25 basis points (bps) to 2.75%. The decision was made to keep inflation low and stable while supporting growth. So what does it mean to the everyday Malaysians? A higher OPR would trigger the local banks to adjust their lending base rate (BLR) and base financing rate (BFR).

This would then indirectly affect the interest rates - which means hgiher costs for borrowing or refinancing existing home loan. To understand better, you should read Fixed vs Floating Interest Rates.

p.s. Check out Loanstreet’s home loan comparison page to find out the best interest rates offered by banks.
 

You may not be able to control the situation, but you can control how you react to it




Will Malaysia Ringgit currency rise any time soon? Well, it depends on the economic performance, inflation, interest rates, current account deficits, public debt and terms of trade. Of course, it’s convenient to point fingers and blame our government, our boss, our friends or that uncle from the mamak shop for the setbacks in your life. But, will that change anything? NOPE.

So, why not join the game instead? Like what we mentioned in point 4, you can make the best out of it. Here are other ways to take advantage of the situation:
  • Save in foreign currency i.e. USD, SGD, Pound. You can either open a Foreign Currency Account (FCA) or go to a currency exchange shop (make sure it’s competitive), convert your money to foreign currency and keep them as savings.
  • Invest in gold. Why? Because the gold price decreasing, the cash you’d have in gold is shielded from devaluation.

READ MORE: Who wins and who loses when the Ringgit depreciates


*The above article is intended for informational purposes only. Loanstreet accepts no responsibility for loss that may arise from reliance on information contained in the articles.
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About the Author

Nisya Aziz

A storyteller at Finology, who drinks coffee like its water, Nisya enjoy bringing valuable, educational and entertaining content to others. When not busy crafting content, you’ll find her in the boulder gym or on stage, performing theatre shows.

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