Malaysian Ringgit Surges: Importers Benefit, Tourism Faces Challenges

The Malaysian ringgit has reached its highest value against the United States dollar in over a year, offering significant advantages to local importers but posing challenges for the tourism industry. As of November 11, the ringgit surged to RM4.16 for US$1, a notable recovery from its low of RM4.79 in February 2024, which marked the weakest point since the late 1990s Asian Financial Crisis.

This appreciation has been particularly beneficial for businesses reliant on importing goods. Chua Hunt, chief executive of D&R Garments Manufacturing, reported that the stronger ringgit has allowed his company to import fabrics at reduced costs, enhancing their ability to secure higher-quality materials. “This cost improvement has meaningfully offset any headwinds from exports,” Chua stated. The company plans to optimize production schedules between Malaysia and China to further capitalize on this favorable exchange rate.

In Johor Bahru, the local motorcycle dealership Yamaha Star Centre Singdeca Enterprise has reported an increase in customer spending, attributed to higher purchasing power stemming from the currency’s strength. Manager Hafiz Norzaman noted an uptick in customers from surrounding areas seeking to upgrade to more powerful models. The dealership has also been able to offer attractive discounts, thanks to cheaper imports of motorcycles and parts.

While the ringgit’s rise has benefited some sectors, it poses challenges for tourism and export industries. Ivan Teo, chairman of the Malaysian Association of HotelsUS Federal Reserve and Malaysia’s efforts to narrow its fiscal deficit. Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia, noted that the anticipated interest rate adjustments by the US could make the ringgit more appealing to investors. The Malaysian government aims to reduce its fiscal deficit from 4.1 percent of gross domestic product (GDP) in early 2024 to 3.3 percent by the end of the year, which has further bolstered investor confidence.

Prime Minister Anwar Ibrahim highlighted in Parliament that the ringgit has outperformed other regional currencies, gaining against the Indonesian rupiah, Philippine peso, and others. He attributed this success to fiscal discipline and targeted subsidy measures, including adjustments to petrol prices.

Looking ahead, economists remain cautiously optimistic about the ringgit’s trajectory. Cassey Lee from the ISEAS-Yusof Ishak Institute pointed out that strong export growth, driven partly by a reciprocal trade agreement with the US, supports the currency’s upward trend. Lavanya Venkateswaran, an economist at OCBC Bank, predicts that the ringgit could reach RM4.16 per US dollar by the end of 2025, contingent on the resilience of Malaysia’s economic fundamentals.

In light of these developments, Malaysian tourism operators are proactively seeking to attract visitors from less affected markets. Teo mentioned that tour companies are now focusing on promoting Malaysia to Chinese tourists who typically exhibit lower sensitivity to currency fluctuations. With a goal of welcoming 47 million visitors as part of the Visit Malaysia 2026 campaign, the industry remains hopeful that strategic marketing efforts can offset declines in other visitor demographics.

As the situation evolves, businesses in Johor Bahru that cater to Singaporean clientele have reported minimal impact from the stronger ringgit. Ramesh Ponnayah, manager of Legend Car Wash, noted that customer numbers from Singapore have remained consistent. “They still choose to spend money here,” he said, reflecting a resilience in cross-border spending patterns.

Overall, while the ringgit’s appreciation presents mixed outcomes for various sectors, its positive effects on import costs for manufacturers and local businesses are evident, even as the tourism industry navigates potential challenges. As the economy adjusts, continued monitoring of currency trends will be crucial for stakeholders across Malaysia.