The money flow


  • Business
  • Saturday, 22 Aug 2015

AS the ringgit zooms towards the RM4.20 level to the US dollar, the impact of the depreciation of the ringgit can be felt in many ways. Education or travel overseas will generally cost more. In time as contracts for goods and services get renewed, imported goods might cost more.

The ringgit’s weakness is also influencing capital markets. The stock market has seen a steep selldown and bond holders are also trimming their holdings as the ringgit slides against the dollar. The drop in foreign exchange reserves is another indicator which does not breed confidence for the markets.

The collapse of commodity prices, particularly crude oil, is hurting the value of the ringgit which has tracked the value of crude oil loosely over the past few years. The price of crude palm oil below at RM2,000 a tonne eats into export earnings. But exports tend to bloat when the ringgit is weak and that was seen in June. Investments into Malaysia do not seem to be affected by the drop in the ringgit.

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Business , graphic , money flow , text , ringgit

   

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