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5 Ways the Falling Ringgit Is Affecting YOU, the CONSUMER

BY Team Loanstreet

Updated 18 Mar 2024




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*This article was first written by Nisya Aziz. The content and information on this article might be changed or updated periodically by Team Loanstreet without notice.

 

Our ringgit has been falling against the US dollar. As we’re writing this article, the current Malaysian currency rate is US$1 = RM 4.71 (as of 7 March 2024). Datuk Abdul Rasheed Ghaffour, Malaysia's central bank governor, mentioned that the currency's performance took a hit due to "external factors" like US rate hikes, geopolitical tensions, and uncertainty surrounding China's economic outlook.

 

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 a consumer.


 

What's covered in this article?


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




Since our ringgit is falling, it makes import prices 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 the 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 money for education.




According to The Star, a whopping 88% of Malaysian parents would consider sending their children 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 enroll 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 and Pornhub Premium, just to name a few. They're going to 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 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 raise the overnight policy rate (OPR) to 3.00% starting July 2023. 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 higher costs for borrowing or refinancing an 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's 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 it as savings.
  • Invest in gold. Why? Because the gold price decreases, the cash you’d have in gold is shielded from devaluation.
*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.


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

Team Loanstreet

Run by a professional human-sized team, get resourceful tips & guides from our very own library of financial articles that can help improve your financial lifestyle & make a well-informed money decision. We strive to provide you with the best service in helping you to get the most out of that DUIT!

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