Question

Detail the 6-10point to answer?
What are the key factors that have influenced the movement of the ringgit against the US dollar since 2010?

Answer 1

There were several key factors that have influenced the Malaysian Ringgit against the US dollar.

First we have to understand where the major currencies of the world find their values and what are the factor that influenced any country currency against the world.

1 Demand and Supply

2 Economic conditions

3 Capital inflow and outflow

4 Market conditions

5 Stability of Government

6 Investing Capability

7 Exchange rate/ Controlled Float exchange rate

1- Demand and Supply

What mainly determined the value of any countries currency in the Demand and supply of that currency at that movement, that is largely determined by the market forces.

2- Economic conditions

If the Economy is in their boom state, Industries are growing producing healthy amount of goods for export. the country currency would be stronger.

If the economic conditions are not tend to favorable to industries and country importing large amount of goods, this will lead to weak currency of that country.

3- Capital Inflow and outflow

If there is more inflow of currency, more foreign currency is converting in domestic currency that makes it stronger.

on the contrary if more outflow of that currency, more of country is sold and converted into foreign currency, that makes it weaker.

4 - Market Condition

Market condition also play an important role in this, if the country is developing country with the growing population more fortune would come in terms of Business investment that require lots money conversion which make currency stronger.

5- Stability of government

Stable govt. always have an edge over changing govt. A stable government can make proper and short & long tern economic policies. they also executed properly. An unstable currency always have uncertainty and fear of loosing value.

6- Investing Capital

Investors are the backbone of any economy. it all depends on them whether they are local or foreigner. A strong economy always lure investor to invest in a country. Good amount of investing in any country always make their currency stronger.

7- Exchange Rate/ Exchange floating rate

The value of a country’s currency is usually proportionate to the amount the country has in gold reserves,as the world gradually moved away from the gold standard currencies around the world have slowly backed their currencies with international reserves which includes gold and other major foreign reserves, larger the gold reserve stronger the currency.

There is a reason why the ringgit appreciates and depreciates. since 2010 onward these factors have played an immense roll to influenced the ringgit against the US Dollar. So when the next time Ringgit fluctuate go look for these factors.