Full Title: Secular decline in ringgit’s value due mainly to falling relative competitiveness – a result of decades-long poor government policies
Let us begin by establishing three basic principles. What is an exchange rate? It is the external value of a country’s currency, and it is always relative to another. Over the last 10 years, the ringgit has appreciated against some currencies (see Chart 1). Unfortunately, it has fallen against major global currencies and those of neighbouring countries (see Chart 2). Most times, we talk about the value of a currency relative to the US dollar (that is, the value of the ringgit to the USD), given the hegemony of the greenback (for trade and as a reserve currency).
