Before the crisis, the ringgit was trading about RM2.50 to the US dollar and fell to 4.60 in January 1998 and pegged at 3.8 in September of that year. It was unpegged in July 2005.
While the ringgit has crept up against against the greenback since late last year to 4.24 recently, it has lost ground against the other currencies like the Thai Baht, Yen, Singapore dollar.
Why did this happen? For one, Malaysia is more susceptible to what we call the “Trump Effect” which applies to foreign investments that are taken out of emerging markets (including Malaysia) and into US dollar denominated investments.
This happens due to investor speculation of the US dollar strengthening from as a result of expected tax cuts by President Donald Trump.
Since 40% of Malaysia’s government debt (bonds) is held by foreign investors, this has caused a negative impact.
Other factors that might have contributed to the further weakening ringgit are rising oil prices, and weak consumer confidence.
How does this affect travel? Well, a by-product of a weaker currency means that it is now more expensive for us to travel abroad, especially to countries with a stronger currency.
Although, this could mean Malaysia will receive more revenue from foreign tourists.
Here’s how you can continue to travel with a weaker ringgit.
Go where the currency is weak. Instead of that road trip through Europe, you might consider to visit a country with an economy that works in your favour such as Indonesia or Thailand, for instance.
If you’re looking for something a little further, Argentina could be an option at 4.13 Argentine Peso per RM1 (it’s a bargain for most travellers this year) or even Cape Town in South Africa at 3.29 South African Rand per RM1. Of course, you need to factor in the other costs like the flight.
Buy flights on sale. Many airlines are not shy about their sales or promo period offerings and you should most definitely take advantage of them.
This includes the ever popular AirAsia Final Call Sale, Final Call X Sale, and even their Free Seats campaign.
Don’t forget to also buy tickets during the annual MATTA Travel Fair. Sign-up for airline e-newsletters to ensure you will never miss another sale again.
Consider a domestic holiday.. Travelling within Malaysia can be just as exciting especially if you dare to venture into the lesser known areas like Tusan Beach in Sarawak, Teluk Senangin in Perak, Gem Island in Terengganu, or even the Rainbow Waterfall spot in Pahang.
Join a frequent flyer programme. If you’re a loyal traveler on an airline operator you could stand to gain a lot from their member-exclusive benefits such as airport lounge access, free flights, seat upgrades, and more.
The new AirAsia BIG Freedom Flyer Programme is designed to reward you for every flight you take and in turn, you earn BIG Points quicker to redeem free flights.
Get yourself an air miles credit card. To make this worth your while, look for an air miles credit card that comes with a partnering airline deal.
For instance, the AirAsia-Citi Gold Visa Card is meant for people who want to combine their credit-card spending with flight discounts.
Based on your monthly spending, you can earn up to two times AirAsia points. In fact, if you convert any of your credit card points to AirAsia BIG points between now and Nov 5, 2017, you will gain 10% additional BIG Points. You just need to sign up at CompareHero.my.
Don’t let the weakened ringgit dampen your spirits since that’s beyond our control.
The best thing we can do is try to find ways to make the best out of the available options and continue to see the world.
“When preparing to travel, lay out all your clothes and all your money. Then take half the clothes and twice the money.” – Susan Heller
Nadia Khan is Content Manager of www.CompareHero.my dedicated to increasing financial literacy and to help you save time and money by comparing all credit cards, personal loans and broadband plans in Malaysia.