Subscribe to Our Newsletter

We know you love savings. Sign up for more!

5 Ways the Falling Ringgit Is Affecting YOU, the CONSUMER

Updated 17 Sep 2019 – By Nisya Aziz


Our ringgit has been falling against the US dollar. As we’re writing this article, the current Malaysian currency rate is at US$1 = RM4.18 (as of 6 September 2019). The Malaysian Reserve reported that this is mainly caused by the trade war between the US and China. Since these two countries are Malaysia’s largest and third-largest export markets respectively, it means that any slowdown in the world’s two biggest economies will drag the country’s economy.

So what does 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.
 

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 of the examples 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 Domestic Trade and Consumer Affairs Minister, Saifuddin Nasution Ismail, the nation's food and live animal imports increased from RM38.9 billion in 2013 to RM51.3 billion in 2017. This explains why our food item 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 a 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 a good time to get one.



Recently, Bank Negara Malaysia (BNM) has decided to reduce the Overnight Policy Rate (OPR) to 3% (previously 3.25%). The decision was made to accommodate the slowing economic environment. So what does it mean to the everyday Malaysians? A lower 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 lowered 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
 
Continue reading...

Suggested Articles

Gig Economy Malaysia: Empowerment or Exploitation?

Gig Economy Malaysia: Empowerment or Exploitation?

Lazada vs Shopee: Easiest, Fastest & Cheapest

Lazada vs Shopee: Easiest, Fastest & Cheapest

Ugh, Someone Double-Parked My Car! Who Can I Call?

Ugh, Someone Double-Parked My Car! Who Can I Call?