Malaysian Ringgit is the official currency of Malaysia. Also called the Malaysian dollar, the Central Bank of Malaysia “Bank Negara Malaysia” has the right to issue ringgits since 1975. The common denomination of ringgits is divided into 100 sen. Moreover, coins of 1 sen, 5 sen, 10 sen, 20 sen and 50 sen are also commonly used along with a 1 ringgit coin.
Ringgit is also used in the border areas of Indonesia, Philippines, and Thailand, along with the fabric trading markets of Vietnam.
During the colonial era of Spain and Portugal, Spanish dollar was used as a monetary unit. Ringgit bore its name from the sharp edge coins of the colonial time. Its currency note has a picture of first ruler King Abdul Rehman on one side and economic architecture on the other side.History:
Before ringgit, Malaysia’s used Malaya and British Borneo dollar at par as an official currency. The new official currency held all the previous denomination (except for the highest) and color of the Strait Settlement dollar of the 19th-century colonial era. The initial unit was pegged with British Pound Sterling, where the original value equals 8.57 ringgit per 1 British Pound Sterling.
Minting of coins began in 1967 with slight modifications in 1971. The size was similar to that of the Singapore and Brunei dollar coins. According to the Interchangeability Agreement between Singapore, Brunei, and Malaysia, Malaysian dollar was exchanged at par value with the Singapore dollar and the Brunei dollar till 1973, when Malaysia withdrew itself from the Agreement. Minting of coins ended in 1989 with the introduction of the second series which had a modification in size of various denominations. Later on in 1993, the term and initial dollar $ was replaced with symbol RM as Ringgit Malaysia to be officially used.
During 1995-1997, the Malaysian Ringgit was a free float currency valuing 2.5 against 1 US dollar. The 1997 Financial Crisis dropped the value of RM to 3.8 per US dollar and in 1998, The Bank Negara Malaysia shifted the peg from British Pound Sterling to US dollar and the initial rate decided was 3.80 per each dollar value. This remained for 7 years until in 2005; the peg was removed shortly after China’s end of their peg.
During the phase of 1998-2005, the crisis had affected Ringgit to a greater extent. The depreciation of RM to other currencies was significant especially against Singapore dollar and British Pound Sterling before it recovered in 2008 when the central bank intervened to maintain stability in trading of its currency.
However, the political instability in the country due to elections and falling oil prices in the global market contributed to the depreciation of RM in 2008, whereby the lack of interest in raising interest rate also contributed to the issue. Similar decline trend was observed in 2014-15 due to scandals and stock market crisis in the Asian market. The third minting coins started in 2012 which portrayed flora and fauna motifs as a distinctive and diversified culture of Malaysia.
A gold bullion coin was also issued by Royal Mint as for investment purpose rather than daily transactions.