- Country: Malaysia
- Currency: Ringgit
- Alias: Malaysian ringgit
- ISO 4217 CODES: MYR/458
- Symbol: RM
The ringgit is the national currency of the Federation of Malaysia, an alliance of former British colonies in Southeast Asia. The term means “jagged” in Malay, and refers to the serrated edges of Spanish silver dollars that were used throughout the East Indies in the 19th century. Malaysia’s central bank is known as Bank Negara Malaysia, and is responsible for all currency controls. As recently as 2005, the exchange rate of the ringgit was pegged directly to the U.S. dollar, but the peg has since been shifted to a “basket of currencies” model.
Background of the Malaysian Ringgit
During World War II, the Japanese invaded that Malaysian capital of Kuala Lumpur, but surrendered on September 13, 1945. The Federation of Malaysia was established in 1963. Currency controls were introduced in 1986 to stabilize the economy and prevent currency speculation. Controls were lifted for non-residents in 1999. In 2005, Malaysia rescinded a 7-year-old policy of pegging the ringgit to the U.S. dollar, instead opting for a peg to a basket of currencies. The exact composition of the basket is a supposedly well-guarded secret to prevent unwanted speculation by currency traders.
Today, Malaysia is an important trading partner with the United States, and is one of the world’s largest exporters of semiconductor devices, electronics and appliances. Malaysia also exports a significant amount of oil and liquefied natural gas to other Asian countries.
Malaysians sometimes refer to the ringgit as the “dollar,” which is the old name for the country’s currency. Additionally, in the Malay language, the currencies of Singapore (dollar) and Brunei (dollar) are also referred to as ringgit. Therefore, the abbreviation “RM” is used to denote “Ringgit Malaysia.”
The ringgit is divided into 100 sen. Denominations for coins are 1 sen, 5 sen, 10 sen, 20 sen, 50 sen and RM1. Denominations for banknotes are RM1, RM5, RM10, RM20, RM50, RM100, RM500 and RM1,000.