What is happening with the falling of Ringgit Malaysia?

The Malaysian Ringgit currently has fallen below the weakest point during the most challenging period of the Asian Financial Crisis which was in 1997. With more than half of our food supply are imported will further add on the exchange rate impact to the bottom line and also will further put pressure on inflation. Parents who sent their children for overseas education are also feeling the impact with needing to fork out more.

What are some of the factors that led to low Ringgit Malaysia (MYR) vs our foreign counterparts?

Higher reliance on import compared to export
Unstable political environment
Hazy economic policy and sluggish growth resulting in significant uncertainties that further lower market and Foreign Direct Investment confidence
Concerns about Malaysia Fiscal Sustainability given the 26 consecutive years of budget deficit since 1998
Concerns about Malaysia Debt Sustainability with Federal Debt risen to approximately RM1.4 trillion (80% of GDP) in 20222 up from approximately RM800 billion in 2015
The country’s Current Account Surplus have narrowed from double digit to single digit
Malaysia interest rate is also lower compared to United State and many of its neighbouring countries will also get investors to move away from Malaysia and its currency
Corruption Index also reduces business and investor confidence as it affects costing and productivity. 1MDB saga with its huge financial burden and confidence in Malaysia
The proportion of Malaysian spending is higher than investing by about 50% also mean there is little investment within our monetary system
Where it is investment, a huge portion also prefer to invest overseas also contributing to the exchange rate as local are not confident in Malaysia itself
Talents and brain drain over time means the country will lack of the expertise and talents that will contribute to the GDP of Malaysia
High reliance on foreign labour also means outflow of these workers sending money back to their home country
Malaysia is also losing in tourism income to Thailand that have been growing significatively over the last 10 years

At the end of May 2023, the exchange rate of MYR to USD, GBP and SGD is approximately 4.63, 5.76 and 3.40 respectively.

As a Finance Outsourcing company, we are trained to look at the numbers and what contribute to the numbers. The above are purely to gather the facts and figures for information and it is purely InTune own view of what is happening and in no way represents any form of opinion or recommendations.

How InTune Outsourcing Can Support SME Business Owners?

InTune Outsourcing is one of the Malaysia’s Most Advanced and Top Outsourced Accounting, Finance, HR and Payroll services providers.

We have served more than 400 clients todate and InTune offer full-range services from start up to small to medium-sized companies.

InTune takes away the stress and pains from managing Accounting, Finance, Payroll and HR, including Bookkeeping, Payment Services, Accounts Payable, Accounts Receivable, Payroll and more, by providing an expert team of CPAs and other accounting professionals who understand the special accounting needs of growing businesses.

We can also help in preparing Budgets too as part of our Consultancy Package.