PETALING JAYA: As the ringgit continues to strengthen against major world currencies, Malaysians are seizing the opportunity to diversify their currency portfolios by taking advantage of the favourable exchange rate.
The ringgit’s surge, positioning it as the top-performing currency in Asia, has led many to rethink their financial strategies while some are travelling more overseas.
Others are seizing the opportunity to invest in more stable foreign currencies.
The ringgit closed at RM4.14 against the greenback yesterday: its strongest in 30 months. It was above RM4.70 to the greenback several months ago.
Among the factors supporting the currency is the large interest rate cut of 50 basis points by the US Federal Reserve (Fed), higher inflow of foreign investments, as well as confidence in the country’s economic and political stability. With the Fed set to bring its interest rate much lower through 2025, any US dollar rebound could be shortlived.
This has contributed to a year-to-date appreciation of over 11% against the greenback.
“It’s a bit of a virtuous cycle – Fed cuts strengthen the ringgit, commodities get a boost from China’s stimulus efforts, and traders are jumping on the ringgit bandwagon, expecting more inflows,” said SPI Asset Management managing director Stephen Innes.
On the sustainability of the ringgit ascent, he said it would depend on whether the US economy could achieved the “much-hyped soft landing” or if China’s policymakers could stave off deflation and revive growth through their slew or economic measures, he added.
“Sticking below RM4.20 seems doable, but a move closer to RM4? That’ll require both the United States and China to get their acts together... If that alignment happens, the ringgit could fly,” he said.
The ringgit has shown strength against the Euro, Singapore dollar, Canadian dollar and Japanese yen, indicating a broad-based improvement in its performance compared with its trading partners.
Ahmad Fauzi Rahman, 32, said he bought the euro after the ringgit extended its gains.
“I actually bought some to keep for my next trip to visit my sister in Sweden in December,” said Ahmad Fauzi, who believes it’s best to buy the euro while the ringgit is strong.
“Who knows if the ringgit will weaken again in the coming months? Better to buy now.”
Linda Hussin, a 38-year-old computer programmer, who recently travelled to eastern Europe, observed the ringgit’s improvement against the US dollar upon her return.
Due to that, Linda decided to exchange various foreign currencies she had left over for US dollars and euros.
“I feel this is a prudent investment and a way to hedge against potential future depreciation of our currency,” she said.
Although inflation has tempered the benefits, she believes holding extra US dollars and euros is a wise move amid global economic uncertainty and geopolitical tensions.
Ilman Said, a 35-year-old engineer, welcomed the ringgit’s appreciation as his company prepares to transfer him to its US office for a five-year assignment.
Having sold most of his assets in Malaysia, including his car, he is planning to exchange his money for US dollars while the rate remains favourable.
“The stronger ringgit means I can get more value for my money,” he said, highlighting the advantages of timing his currency exchange.
Similarly, Janice Chan, 25, said the stronger ringgit has benefited her during her trip to Taiwan with her brother last week.
“We managed to exchange around 10% more Taiwanese dollars compared with my friends who travelled there in June.
“Now that the ringgit is getting stronger, I joked with my brother that we should have travelled a bit later to get even more Taiwanese dollars,” she said, adding that the stronger currency had made her holiday more affordable.
“Every bit helps, and having more money meant we had more to spend! I definitely could buy a few extra bubble teas to enjoy,” Chan added.
Meanwhile, Samantha Liow, who was also in Taiwan earlier this month, said she noticed a better exchange rate compared with last year when she was there.
“Honestly, I didn’t feel a significant difference when spending there, likely because it was offset by inflation and the touristy places I visited this time,” Liow said, adding that she hopes to see the ringgit appreciate more.
“I usually keep some US dollars in cash for travel. I’m considering buying more, but not now, as I believe the ringgit will strengthen further with more rate cuts by the US Fed next year.
“I’ll be waiting for my year-end bonus to invest with the ringgit,” said the 30-year-old.
