The Ringgit, unofficially called the Malaysian Dollar, has been Malaysia’s official currency since 1975. The word ringgit is an obsolete term for “jagged” in Malay that was originally used to refer to the serrated edges of silver Spanish dollars (which were used previously, to prevent thieves from shaving off small portions of the precious metal to create new coins). The symbol of the currency is RM, and the currency code is MYR and the Ringgit can be divided into 100 sens (cents). The denominations used are the 5, 10, 20, 50 sen for the coins, and RM1, RM5, RM10, RM20, RM50, RM100 for the bank notes.
Since the 16th century, Malaysia had adopted the Spanish dollars when it was part of the European colonial powers. Malaysia replaced the Spanish silver dollar with the Indian Rupee in 1837, only to reintroduce the Spanish silver dollar 30 years later. In 1903, Malaysia changed its currency to the Straits Dollar, which was pegged at two shillings to the British Pound and it was only in 1967 when the central bank Bank Negara Malaysia introduced the Ringgit currency, that was originally stated as the Malaysian dollar. Prior to this date, the official currency was Dollar Malaya which was also used by Singapore and Brunei.
The advent of the Ringgit
When the Ringgit currency replaced the Malaya and British Borneo dollar at par, the new currency retained all denominations of its predecessor except the $10,000 denomination and even used similar colour schemes. The new currency which was originally pegged at 8.57 dollars per British Pound was not affected by the devaluation of the Pounds few months later, while the older notes, still pegged with the British Pound, reduced in value to 85 cents per dollar.
In 1968, the $1000 denominations were introduced and it was the first bank note to feature the image of Tuanku Abdul Rahman, the first Yang di-Pertuan Agong of Malaysia and the signature of Tun Ismail bin Mohamed Ali, the first Malaysian Governor of Bank Negara Malaysia.
The Interchangeability Agreement that binds three countries, Malaysia, Singapore and Brunei together, meant the Malaysian dollar was exchangeable at par with the Singapore dollar and Brunei dollar. When Malaysia withdrew from the currency union at 1973, the value of the Ringgit currency was no longer interchangeable for the Singapore or Brunei currency, hence the Malaysian government decided to terminate it. Brunei and Singapore however, continued with the Agreement until present day. Soon after in 1975, the Malay names “ringgit” and “sen” were officially adopted as the official names. However, the currency symbol of “RM” was only introduced much later in 1993 to replace the dollar sign or “$”.
Due to the low demand of the RM1 bills, the RM1 notes were discontinued and replaced by the RM1 coins in 1993. Years later, Malaysia stepped up on their counterfeit measures by introducing an additional hologram strip to the larger denomination RM50 and RM100 notes in 1996.
Asian Financial Crisis 1997
When the AFC hit Malaysia in 1997, there was a huge influx of ringgit taken out of the country to be traded for the RM500 and RM1000 notes. As a result, the RM500 and RM1000 notes were discontinued and ceased to be legal tender in 1999. To avoid fluctuation of the currency in the wake of the crisis, the Central bank issued a monetary policy to safeguard the value of currency and employed the “dirty float” principle. This regime lasted until July 1997 when BNM gave up sustaining the exchange rate in the wake of the Asian Crisis. Since September 2, 1998, the ringgit has been pegged to the US dollar at US$1.00=RM3.8010 in hopes of stabilising the Ringgit currency.
In 2004, Bank Negara issued a new RM10 note with additional security features including the holographic strip previously only seen on the RM50 and RM100 notes. A newwith a distinctive transparent window was also issued. Due to low demand of the coins in 2005, the RM1 coins were demonetised, and taken out of circulation. This was also done to prevent forgery, and ensure standardisation of the 1 ringgit coin (two different versions of the second series coin were circulating). In early 2008, the Bank released a newly designed RM50 bank note.
However, faced with the increasingly gloomy outlook of the recent volatility and uncertainty, a series of challenges lie ahead of Malaysia as it battles with mounting pressure to keep their Ringgit currency competitive. We can only hope that the Ringgit bounces back from its struggles and regains its former glory as a currency powerhouse.
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