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What Do You Need To Know About Malaysia Ringgit

The Malaysian Ringgit, unofficially called the Malaysian Dollar, has come a long way as the Malaysia’s official currency since 1975. Little do people know that the word “ringgit” is an obsolete term for “jagged” in Malay – it was originally used to refer to the serrated edges of silver Spanish dollars (the serrated edges on the Spanish dollars were designed to prevent thieves from shaving off small portions of the precious metal to create new coins).

The symbol of the currency is RM, and the currency code is MYR. The symbol RM was then introduced in 1993 by the Malaysian Government to replace the $ or M$ symbol to denote the currency. The Ringgit can be divided into 100 sens (cents) and the denominations used are the 5, 10, 20, 50 sen for the coins, and RM1, RM5, RM10, RM20, RM50, RM100 for the bank notes.

 

A Brief History Of Malaysia Ringgit

Malaysia adopted the Spanish dollars when it was part of the European colonial powers since the 16th century. The Indian Rupee replaced the Spanish silver dollar in Malaysia in 1837 where the Spanish silver dollar was reintroduced 30 years later. In 1903, the Straits Dollar replaced the currency and it was pegged at two shillings to the British Pound. Malaysia Ringgit was introduced by the central bank (Bank Negara Malaysia) in 1967 where the new currency was originally stated as the Malaysian dollar. Prior to the introduction of Malaysia Ringgit, Dollar Malaya was the official currency, which was also used by Singapore and Brunei.

 

The Central Bank Of Malaysia

The Central bank of Malaysia, or Bank Negara Malaysia (BNM), was established on 26th January 1959 under the Central Bank of Malaysia Act 1958 (CBA 1958). As the name implies, BNM is the regulatory body with the key responsibilities that encompass policing the prudent conduct of monetary policy, safeguarding the stability of the financial system and fostering a progressive financial sector. On top of that, BNM also plays an important role in establishing the financial system infrastructure (focusing on building the nation’s efficient and secure payment systems), as well as building a comprehensive, robust and resilient financial system. In addition to this, the Bank’s has many other important roles include being the banker and adviser to the Government and it is the sole authority in currency issuance as well as managing the country’s international reserves.

 

The Pegging And Unpegging Of Malaysia Ringgit To US Dollar

The ringgit was then pegged to the US dollar at US$1.00=RM3.8010 in the effort to stabilise the Ringgit currency since September 2, 1998. After the near two-decade peg against the US dollar at 3.8, BNM de-pegged the Malaysia Ringgit to the US dollar on July 21, 2005, immediately after China’s announcement of the unpegging renminbi to the US dollar. According to BNM, the unpegging decision allowed the currency to perform based on real demand and supply without active intervention by BNM, limiting the role of the central bank in managing fluctuation in the ringgit’s exchange rate.

 

Banknotes And Coins

BNM first issued the first series of coins and banknotes in 1967. The coins were introduced in denominations of 1 sen, 5 sen, 10 sen, 20 sen, 50 sen, followed by the introduction of the 1 ringgit coin (which used the $ symbol and is the largest coin in the series) in 1971. The Malaysian dollar banknotes were introduced in denominations of $1, $5, $10, $50 and $100 denominations.

The $1000 denominations were introduced in 1968 where it was also the first banknote to feature the image of Tuanku Abdul Rahman (who was the first Yang di-Pertuan Agong of Malaysia) and the signature of Tun Ismail bin Mohamed Ali (the first Malaysian Governor of Bank Negara Malaysia). When the new Malaysia Ringgit currency was introduced and replaced the Malaya and British Borneo dollar at par, the $10,000 denomination was discontinued.

The RM500 and RM1000 notes were discontinued and ceased to be legal tender in 1999 due to the Asia Financial Crisis that hit Malaysia in 1997. During the Asia Financial Crisis, a huge influx of ringgit was taken out of the country to be traded for the RM500 and RM1000 notes. In the wake of the crisis, the Central bank (Bank Negara Malaysia, BNM) issued a monetary policy to protect the value of currency and employed the “dirty float” principle as well as to avoid fluctuation of the currency. This regime lasted until July 1997.

Themed ‘Distinctively Malaysia’, the latest series of Malaysian banknotes gets its inspiration from elements, which could distinctively define Malaysia’s diverse culture, heritage, and nature. The fourth series of Malaysian banknotes features traditional expressions in the art and craft, natural wonders, flora and fauna, economy and tradition.

 

Malaysia Ringgit Today

As of now, the Malaysia Ringgit is performing well against other currencies in ASEAN (Association of Southeast Asian Nations). The growing and resilient Malaysian economy have been the reason that helped Malaysia to weather through the tough times.