When the financial crisis occurred in 1997, the Malaysian government stopped printing large banknotes above RM100 in order to prevent its citizens from exporting large amounts of money to foreign countries. Among them, the printing of large RM500 and RM1,000 banknotes has stopped. These banknotes can no longer be used in the market and have only collection value.
Also due to the financial turmoil, since September 1, 1998, under the proposal of former Malaysian Prime Minister Mahathir, the exchange rate of the Malaysian currency has been pegged to the US dollar, and the exchange rate has been fixed at 1 US dollar to 3.8 ringgits. . Since 2004, due to the sharp devaluation of the US dollar, there have been growing calls in Malaysia for the government to lift the fixed exchange rate against the US dollar. Due to the locked-in exchange rate during the financial crisis, Malaysia's losses were relatively small compared to those of other countries such as the Philippines, the Republic of Korea, Thailand and Indonesia. It is therefore not subject to the constraints of the International Monetary Fund.
On January 20, 2005, after meeting with economics professor Joseph Stiglitz in Putrajaya, Mahathir announced that the Malaysian government should reassess the link between the ringgit and the U.S. dollar due to the continued depreciation of the U.S. dollar. Tick ??the question. He also said that Malaysia suffered a lot as a result.
On July 21, 2005, it was announced that the fixed exchange rate system between the ringgit and the U.S. dollar that was implemented seven years ago would be abolished and replaced with a managed floating exchange rate mechanism (managed float) with immediate effect, decoupling the ringgit from the U.S. dollar. It will float according to the exchange rate of a basket of currencies, that is, the ringgit can float freely within the range. In the event of severe fluctuations, the central bank of Malaysia can immediately intervene. Financial analysts point out that the current economic strength is capable of defending its currency value. Because when the financial crisis occurred in 1997, Malaysia's foreign exchange reserves were only over US$30 billion, and its current accounts were in deficit. At present, Malaysia's foreign exchange reserves have reached more than 70 billion US dollars, and there is still a surplus in the current account. Therefore, it is believed that Malaysia will be more capable of implementing a managed currency floating method in the future.
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