PETALING JAYA: The ringgit’s surge to a five-year high against the US dollar is prompting Malaysians, especially travellers, to exchange the currency early, keeping money changers busy despite the usual post-festive lull.
“We had expected the crowd to decline this week, but it is still at around 70%,” said Malaysian Association of Money Services Business president Datuk Seri Jajakhan Kader Gani.
He said the ringgit’s current level of around 4.04 against the US dollar is among the strongest in recent years, reflecting a gain of about 20% from previous levels near RM4.80.
“This is what we are seeing in the foreign exchange market now,” he said.
The Japanese yen, which remains at multi-year lows, continues to see the strongest demand, followed by the renminbi and Indonesian rupiah.
Demand for the rupiah remains strong but interest in the Thai baht has slowed due to flooding in southern Thailand and geopolitical concerns.
The Vietnamese dong continues to see steady demand.
“Currency exchanges are driven mainly by travel rather than investment. Those who are travelling are clearly taking advantage of the roughly 20% gain,” Jajakhan said, noting that the cost difference is most apparent for US dollar-denominated expenses.
He estimated that 60% to 70% of currency exchanges are for travel, with the remainder for education, savings or other needs.
Demand for the yen typically rises ahead of the sakura season in March and April, as well as during Chinese New Year and Hari Raya.
Reflecting on the ringgit’s performance, he said a similar strengthening was last seen around July to August 2016.
“This is the second time we’ve seen such a strong spike. The ringgit is among the best-performing currencies this year,” he said.
He cited the example of a popular mall in Kuala Lumpur where the money changers would get around 3,000 customers daily ever since the ringgit strengthened.
The strong ringgit has encouraged Malaysians to plan ahead for future travel and investments.
Self-employed Razak Osman said: “It’s very positive. I’m already planning a holiday and have started exchanging money because the ringgit is much stronger against the dollar now. I’m also considering exchanging some for savings while the rate is favourable.”
Razak, 35, said he has been monitoring the exchange rates regularly.
“With the ringgit strengthening, Indonesia has become a more attractive destination, as Malaysians can now get more rupiah than before,” he said.
Marketing manager Jack Yap, 50, said he recently exchanged US$2,000, planning to convert it back when the ringgit weakens.
“Since the ringgit is strong, I exchanged some US dollars and plan to convert back when the ringgit weakens to earn extra income,” he said, adding that this approach works only if one has surplus cash.
Racheal Kaur, 55, a housewife, said she and her friends are planning a trip in March next year.
Seeing the favourable rate, she exchanged some euros and US dollars.
“I’m lucky the ringgit is strong now. It’s good news for Malaysians going abroad. I can exchange more money for travel and have a bit extra to spend,” she said.
The ringgit extended its rally yesterday, opening higher to reach another five-year high amid a holiday-shortened trading week. It hit 4.0410/0495 against the US dollar compared to 4.0425/0515 at Wednesday’s close.
However, it ended the day slightly lower at 4.0470/4.0535 against the greenback.
