Friday, July 22, 2005

Malaysia New Currency Exchange and What it Means to International Visitors

On 22 July 2005, the Malaysia fixed currency exchange (pegged to the USD since September 1998 at US$1 = RM3.8) was replaced with a managed float regime against a basket of currencies.

This exchange rate system was previously practiced before the 1997/1998 Asian Currency Crisis. Hence, it is back to the pre-September 1998 foreign exchange regime.

Click here for a Chronology of Events of the Malaysian Ringgit

Whilst the former fixed exchange rate may give more stability to rates of travel packages and accommodations, the new system means that the value of the exchange rate of the ringgit in a managed float would be determined by economic fundamentals.

Nevertheless, the central bank of Malaysia, Bank Negara, assured that the exchange rate after shifting to this new system is not expected to deviate significantly from the current prevailing level (i.e., around US$1 = RM3.8).

Bank Negara affirmed that it will monitor the exchange rate against a currency basket to ensure that the exchange rate remains close to its fair value. Promoting stability of the exchange rate continues to be a primary objective of the central bank's policy.

What it means to international visitors to Malaysia Borneo is that although the published tour/room rates (i.e., on our website) in Malaysian Ringgit will not likely to be affected, the final rates will be fluctuating based on live market rates after conversion to the currency of your choice.

Please do take note of this matter.

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