The Malaysian ringgit is the currency of Malaysia. The currency abbreviation for the currency is RM, and the currency code is MYR. This is the code seen when requesting a currency quote, such as USD/MYR which shows the rate of exchange between the U.S. dollar (USD) and the Malaysian ringgit.
Ringitt means jagged and is an old term referring to the jagged edges of Spanish coins commonly used in the area in the 16th and 17th centuries.
The currency’s exchange rate is free-floating but is not traded offshore.
The currency circulates in denominations of one, five, 10, 20, 50, and 100 with larger denominations unusable in practice.
The Malaysian ringgit is made up of 100 sen, and is issued in denominations of one, five, 10, 20, 50, and 100. The 500 and 1,000 denominations haven’t been used since the 1990s to help curb money laundering. These denominations are demonetized and have no value.
The Malaysian ringgit is used officially by Malaysia and unofficially in border areas in Indonesia, Philippines, Thailand, as well as some parts of Ho Chi Minh City, Vietnam.
The Malaysian dollar replaced the Malaya and British Borneo dollar in June of 1967 at par. This new currency was officially referred to in “dollars” and “cents” until August of 1975 when the official name was changed to “ringgit” and “sen.”
After the 3.8 peg was dropped in 2005, the currency appreciated to 3.08 against the USD in 2008. It then fell back to 3.73 in 2009. After that it experienced several years of appreciation again, rising to about 3 ringgits per USD in 2011 through the first half of 2013.
The ringgit then lost value, hitting 4.47 in 2016. Through early 2021, the MYR moved between 4.04 and 4.11 per USD.
The ringgit is often unofficially referred to as the Malaysian dollar.
After periods of extreme volatility during the Asian financial crisis in the late 1990s, the central bank of Malaysia (Bank Negara) chose to peg the ringgit to the U.S. dollar at a rate of 3.80 in 1998. Because of the surge in capital outflows during the crisis, trading ringgit outside of Malaysia was banned.
The peg remained intact until 2005 when Bank Negara went back to a floating ringgit, after the People’s Bank of China, and removed the peg on the renminbi. The initial reaction saw the ringgit appreciate in value against the U.S. dollar as well as two prominent trading partners, the Hong Kong dollar and the Chinese renminbi.
The value of the ringgit is susceptible to changes in global emerging markets and political sentiment in Malaysia. In addition, as an exporter of oil and natural gas, the ringgit has some correlation to commodity prices.
Offshore banks that don’t have an onshore presence in Malaysia will trade the ringgit as a non-deliverable forward. In 2016 the Bank Negara started cracking down on these as well. The currency remains non-tradable off-shore.
Assume you want to travel to Malaysia. Once you get there, you look up a quote online and see that the exchange rate is 4.15 USD/MYR. That means it costs 4.15 for each USD, or you get 4.15 ringgits for each USD.
Banks, currency exchange merchants, and even your credit card, will want to make a bit of money on your exchange too, so typically the exchange rate seen online isn’t the rate you will get when buying or selling the physical currency. Check the actual quote with your credit card (usually quoted as a percentage) or currency exchange to compare rates.
Expect the rate to differ by 3% to 5%. This adjusted exchange rate is how businesses make money. So if you want to buy MYR with $500, instead of getting 4.15 for each USD, you’ll likely get 3.94 (5% less). In other words, your $500 buys 1,970 MYR (500 x 3.94) instead of the 2,075 (500 x 4.15).
The same concept applies if you have ringgit leftover when you are leaving that you want to convert back into USD. Say you have 1,000 MYR left. The exchange rate online is still 4.15. This time, since you are buying USD, currency exchanges and banks will give you less for your ringgits, giving a rate of 4.36 (5% more) for example. Therefore, your 1,000 MYR converts to $229.36 (1,000 / 4.36) instead of $240.96 (1,000 / 4.15).