Currency exchange

The current financial crisis is causing havoc in the currency exchange market. The exchange rate for the currencies have fluctuated wildly. For example, the US dollar, which has been on a slide for most of the first half of this year, suddenly turned around. Similarly, the Japanese Yen has strengthened. As a consequence, many other currencies, including the Ringgit, have declined in value.

Mostly, the currency movement is caused by the shifting of funds by investors. The unwinding of the carry-trades by the Japanese is causing the Yen to rise and vis-a-vis the Aussie dollar to decline. Similarly, the repatriation of funds by US institutional investors is causing the US dollar to be on a tear.

The Ringgit had its best day against the US dollar in late April when it was trading at about 3.13. It is now at 3.54, a lose of 13%. The Ringgit has also gone to below 10 Baht. All this is good news for the expoters. However, for the average citizen, the price of imported goods has gone up. And with it .... inflation.