SGD has moved away from RM 1:1 ratio very very long time ago, but US dollar to MYR exchange rate was around 2.3-2.7 most of the time until 1997 crisis. Then it dropped to a point even as low as 4.8. But after most foreign funds have pulled out of Malaysia, and analyzing the import and export balance, M'sia pegged the ringgit to 3.8 to put a stop to speculative forex trading. The ratio of 3.8 is not arbitrary, it depends on the current import and export level. If government has to do another peg in the future, no doubt these factors will be considered. And the peg can be changed if economic conditions changed, lets say oil price recovers and the export earnings > import expense.

The problem with pegging is the foreign funds do not like the rate to be dictated by a government. So they will keep pushing government to remove it. If most of the foreign funds already left the country and there is too much speculative trading (such as those of you changing MYR to foreign currency for example), the government might peg the ringgit to stop the bleeding (because everytime one of you change MYR to foreign currency, it makes the ringgit drops further), and meanwhile the government is not concerned about foreign funds opinions because they hold little investment in the country anyway.

there must be so many ways available now.

go to bank and ask for multi currency account.

go to investment bank and ask for foreign trading.

not sure how much is required before they will accept your application though. for example,

http://www.rhb.com.my/deposits/multi-currency/mc_main.html


This post has been edited by tabletman: Jan 7 2015, 01:55 PM

Any country has the rights to peg their exchange rate to a fixed value. It will be sustainable if the import/export balance can support it. But even if it is, it drives away lots of foreign investment due to loss of confidence as the currency is not longer traded freely, and the foreigners fear that the local BNM could abuse their peg and make them lose money, so will refrain from investing. Last time when we pegged to RM3.8, similar things have happened. And some foreign investment will pull out, and then demand the peg to be removed before they would even consider investing in Malaysia again.

Not a light decision to be made. But if too much speculations is happening, then BNM could do this again. But don't think it is a good thing to those speculators, because once capital control is in place, it is easy for BNM to observe who has lots of foreign assets and maybe they will consider these as not patrioitic. Small fries will probably escape notice. But rich folks can be observed closely and those deemed to be speculating the ringgit to fall will be badly regarded in the future.