The Soft Ringgit: How Does It Affect The Rakyat?

FOR the past few months, the ringgit has been soft causing the rakyat to become worried. But what is really going on? Is the the situation really bad? Should we be concerned and what can be done?

Ringgit weakening is due to speculative activities

The rakyat must remember that the weakening ringgit is beyond our control as it is due to market conditions. More often than not, the ringgit has become weak mainly due to speculative activities.

Speculative activities is when people would make up bad stories such as the Malaysian economy is bad. People who own the ringgit become worried and they sell the money and this has caused the ringgit’s value to drop.

Because of this, there is very little the government can do to stop speculative activities.
But we the rakyat can help by fighting against these speculators by continuing to help the economy by going to work and continue with our daily business activities.

In this way, we can prove to the speculators that their bad news is wrong and that the ringgit is indeed still very strong.

Our economy is still strong

Eventhough our ringgit is weak, the rakyat should not be overly worried because our economy is still strong registering a 4.3 percent growth in the third quarter of 2016. So what the rakyat can do is to continue supporting the economy by going to work and help our companies to do business, go to the office to work or continue to drive the taxi.

Yes, times are challenging but businesses will help spur economic activities and this will ensure that the rakyat continue to earn an income. Second Finance Minister Datuk Abdul Johari Ghani told Bernama on November 28 that the country’s economy is still strong and it will continue to assure investors that our financial system is trustworthy so that investors will have faith in it.

“I believe we have good fundamentals and the ringgit will be strong again,” said Johari.

Weak ringgit can attract international tourists

A weak ringgit can also be helpful to the rakyat as it becomes cheaper for international tourists such as from the US, Europe, Middle East, China and Japan.

This will attract them to come and spend in a Malaysia and go shopping, stay at our hotels, travel in our taxis and eat our restaurants. This activity will help support our economy and continue to provide jobs for Malaysians and put food on our table and we will be able to feed our children.

Soft ringgit also helps our exporters

A soft ringgit can also help our exporters. As an example, a company which sells smart television to Europe will be able to earn more ringgit. The ringgit earned will help companies to pay salaries of their workers.

This in turn will help the worker to bring back their salaries home, support their families and also support the country’s economy.

Relax, the ringgit is not going to crash

Eventhough the ringgit is volatile, an economist said the rakyat should relax because the ringgit is not going to crash. IQI Group Holdings chief economist Shan Saeed said the ringgit is volatile but it will not collapse.

“Sit back and relax because currency values are determined by market forces and I strongly believe the ringgit will soon stabilize and become stronger again. So the rakyat should not panic as the ringgit will become stronger once again,” he told Bernama on December 1.

The ringgit is not the only weak currency

If we look at the other currencies in our neighbouring countries, the Indonesian rupiah has also weakened 3.7 percent, the Philippines peso dropped 2.7 percent, the Singapore dollar fell 2.5 percent and the Thai Baht lost 1.5 percent.

So the ringgit is not the only weak currency in the region. The weak currencies of all the countries is due to the soft economic conditions in the region.

The rakyat can counter this by continuing to work hard and spend at malls, take our children for holidays and go out and have dinners as this will help spur domestic spending and help support our economy.

Nik Haikal Nik Ibrahim is an independent analyst and Malaysian Access reader. Article written is strictly his personal view. Malaysian Access does not necessarily endorse the opinions given by any third party content provider.

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