The Malaysian ringgit has lost nearly 13% of its value in one year! Put your money in the bank and do nothing, your money has also depreciated by 13%.
Last October 15, the RM to USD exchange rate was 4.16, which means RM4.16 to USD1. This year on October 15, the RM to USD exchange has come to 4.70, RM4.70 to USD1. This also means that the Malaysian ringgit has depreciated by 54 sen or 12.98% in 1 year.
Currency devaluation is not just a problem for Malaysia, but for currencies all over the world. The depreciation of the Malaysian dollar is not bad compared to other currencies.
The US has raised interest rates from close to 0% to a range of 3.00% to 3.25% in just 7 months to curb domestic inflation. This also created a situation of a strong dollar, where money from around the world was attracted to the U.S. domestic market and currencies of various countries were devalued to new low levels one after another.
Many people who can’t invest choose to just keep their money in a bank savings account and earn a meager 0.25% interest. This has invariably devalued their savings by about 12% and their purchasing power has diminished.
Of course, this is not to tell you to invest in the stock market or other high-risk investments, because in turbulent times, the stock market are plummeting and losing more than 13% of the devaluation of the Malaysian ringgit in a minute.
No matter what you do, your RM holdings are definitely depreciating. All you can do is to minimize the impact of the currency depreciation on your life.
