Highly valued: The ringgit and US dollar at a money changer in Kuala Lumpur. — FAIHAN GHANI/The Star
PETALING JAYA: The strengthening of the ringgit has seen a strong demand from the public for foreign currencies, says the Malaysian Association of Money Services Business.
Its president Datuk Seri Jajakhan Kader Gani said the rising ringgit has translated to an increasing interest from the public in foreign currencies.
Among the top three purchases are the Japanese yen, Chinese yuan and Thai baht, he said.
“We noticed a spike here. At the same time, there is also sufficient stock to accommodate the demand,” he said.
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He also said there is a strong demand towards the purchase and sales of the US dollar.
“There is about a 10% increase compared to August,” he said, adding that there is sufficient stock of the greenback.
Jajakhan said the strengthening ringgit has prompted greater public literacy towards foreign currencies.
“People are more curious about the daily exchange rates, with many also taking the opportunity to purchase (foreign currencies),” he said.
He added the ringgit’s strength can also be observed through the flood of Malaysian tourists to Thailand during the recent long weekend.
“This trend can also be observed in the backend of money services operations.
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‘The strengthening ringgit can also give positive contributions towards industries,” he said.
SME Association of Malaysia president Chin Chee Seong said the recent strengthening of the ringgit against the US dollar has presented both challenges and opportunities for Malaysian SMEs.
While export competitiveness is somewhat impacted, he said the reduced cost of imported materials and goods provides a balancing effect.
Chin said the primary concern for SMEs is the instability of the exchange rate, which complicates financial planning for SMEs.
“We do not like to have a sudden surge in ringgit or a sudden drop in terms of the exchange rates. This will make it difficult for us to plan,” he said in an interview yesterday.
Chin noted that exchange rate stability is key for SMEs, as extreme fluctuations complicate planning for SMEs, which often lack robust financial strategies.
While fluctuation in the US dollar exchange rate has some effect, he said many SMEs now trade with China using the renminbi, which minimises the impact.
He noted that SME manufacturers account for only about 11% to 13% of total exports, so the overall impact on competitiveness is minimal.
“However, most SMEs import goods in US dollar, so the stronger ringgit actually benefits them by reducing import costs.
“So, SMEs should use savings from lower import costs for automation and digitisation, improving operational efficiency and reducing dependency on manual labour,” he said, adding that a more stable exchange rate would be beneficial for Malaysia.
Yesterday, Malaysia’s ringgit scaled a near three-year high, driven by the recent 50 basis-point interest rate cut by the US Federal Reserve.
The ringgit jumped 0.7% to RM4.171 per dollar, its highest since late December 2021.
The currency is the best performer in the region since the start of the year and eyeing its best year since 2017.
