EXCHANGE RATE AND BALANCE OF PAYMENT IN MALAYSIA DURING THE PERIOD OF 1980 TO 2007

Exchange Rate and Balance of Payment in Malaysia



Table 1: Exchange Rate and Balance of Payment in Malaysia during 1980 to 2007

Year	Exchange rate (RM)	RM (million)
1980	2.2175	1,002
1981	2.2433	-1,093
1982	2.3185	-614
1983	2.3387	-55
1984	2.4263	312
1985	2.4135	3,209
1986	2.6015	4,345
1987	2.4915	2,893
1988	2.7125	-1,104
1989	2.6990	3,332
1990	2.6980	5,365
1991	2.7235	3,427
1992	2.6065	16,744
1993	2.7010	29,239
1994	2.5578	-8,262
1995	2.5405	-4,403
1996	2.5279	6,245
1997	3.8883	-10,892
1998	3.8000	40,301
1999	3.8000	17,819
2000	3.8000	-8,176
2001	3.8000	4,518
2002	3.8000	14,595
2003	3.8000	39,781
2004	3.8000	83,728
2005	3.7800	13,550
2006	3.5315	25,157
2007	3.4545	45,296

Source: Department Statistic, Malaysia, 2009









Figure 1: Exchange Rate of Malaysian Ringgit during 1980 to 2007



Source: Department of Statistic, Malaysia, 2009



Figure 2: Balance of payment in Malaysia during 1980 to 2007



Source: Department of Statistic, Malaysia, 2009

During the period of 1980s, Malaysian currency value start from 2.2175 in 1980.
This value increased in the next year until 1986, which the Malaysian currency value is equal to 2.6015. In 1987, Malaysian currency value decrease to 2.4195. However, this value has increase highly to 2.7125 in 1988 and Malaysian currency value back to decrease in the next year until the end of 1980s. Compare to balance of payment (BOP). Malaysia BOP shows a deficit in the early years. Starting year 1981 there are deficit RM 1, 093 Million, year 1982 about RM 614 Million and RM 55 Million the next year. Thus, the BOP in year 1984 to 1987 shows a surplus totaled RM 10,759 Million with the highest recorded in year 1986 totaled RM 4,345 Million. However, in year 1988 the BOP show a deficit totaled RM 1,104 Million but, in year 1990, the balance of payment has increase at RM 5,365 Million.

In 1990s, Malaysian currency value shows that the exchange rate in Malaysia increase from 2.6980 in 1990 to 2.7235 in 1991. However, this value deceases in the next to 2.6065 and increase again in 1993 to 2.7010. During 1994 to 1996, the Malaysian currency value shows a decreasing from 2.5578 to 2.5279 and this value increased highly in the next year to 3.8883. Malaysian currency value in 1998 and 1999 is constrained with 3.8000. Unlike Malaysian BOP, the surplus of BOP continue after year 1990, where in year 1991 to 1993, total surplus was RM 49 410 Million. However, both year 1994 and 1995 record a deficit in BOP which is RM 8,262 Million and RM 4, 403 Million. After that, there was a surplus of RM 6,245 Million in year 1996 until it show a deficit of RM 10,892 Million in year 1997 due to the Asian financial crisis. In year 1998 it show a surplus BOP at RM 40,301 Million then it decrease about RM 22,482 Million in year 1999 but still in surplus. This is the successful recovery by the Malaysian government policy during the financial crisis.

During the early of 2000s, the value of exchange rate still remain constrain from the end of 1990s which is 3.8000 in 2000 to 2004. However this value decreased to 3.7800 in 2005 and this deficit value have continuously which the value of exchange rate in Malaysia equal to 3.4545 in 2007. Consequently, BOP show a deficit of RM 8,176 Million year 2000 but until then, in the next 4 years, Malaysia record a increase about RM 79,210 Million in BOP which is RM 4,518 Million in 2001, RM 14,595 Million in 2002, RM 39,781 Million in 2003 and RM 83,728 Million in 2004. During 2005, BOP decrease about RM 70,178 Million from the previous year but still record a surplus. However, in the next 2 years, there is increase in BOP totaled RM 70,453 Million where RM 45,296 Million surplus in year 2007.