RINGGIT VALUE AND INFLATION RATE

          This topic was become hot when our currency fell to its lowest level since the Asian economic crisis in September 1998, on the exchange rate 1 USD  is equivalent RM 4.40  today . Ringgit remained weak compared to the US dollar and Singapore dollar was contributed to the surge in prices and the cost of living in Malaysia. Money exchange between the two countries will depend on the demand and supply that currency.

           The effect of the weakening ringgit causes a decrease in the purchasing power of individuals. That means every ringgit of revenue will be able to buy some imported goods and services than ever before. The increase in the cost of living which occurred was also not consistent with the slow rate of wage increases. The inflation rate of a country directly affects the demand for the national currency. If country A has a high inflation rate, it means the purchasing power of consumers, its currency weakened against other countries that have inflation rates that are much lower.

          There are some factor that influence the Ringgit value. Nowadays, there are a number of political crisis in the country are said to be the main cause of the fall of the RM; Among them is a controversy involving a company wholly owned Malaysian Ministry of Finance of 1 Malaysia Development Berhad (1MDB) and a cabinet reshuffle involving the sudden dismissal of Deputy Prime Minister of Malaysia, Tan Sri Muhyiddin Yassin, Attorney-General Tan Sri Abdul Gani, along with several other ministers criticized the government Datuk Seri Najib Razak.
         
           Besides that, ringgit value falls because of falling in commodity prices. Commodity prices like oil, palm oil and rubber fell sharply and its effect Malaysian as a producer such commodities. Furthermore, China had sent down the currency Yuan. The government of China lowered the currency Yuan and cause a collapse of the currency other ASEAN countries.

            In conclusion, the backbone of the economy is fluctuating society, nation and state. I am confident that this issue can be settle down by the government.