The Malaysian ringgit (plural: ringgit; symbol: RM; currency code: MYR; formerly the Malaysian dollar) is the currency of Malaysia. It is divided into 100 sen (cents). The ringgit is issued by the Bank Negara Malaysia.
The word ringgit is an obsolete term for "jagged" in Malay and was originally used to refer to the serrated edges of silver Spanish dollars which circulated widely in the area during the 16th and 17th century Portuguese colonial era. In modern usage ringgit is used almost solely for the currency. Due to the common heritage of the three modern currencies, the Singapore dollar and the Brunei dollar are also called ringgit in Malay (currencies such as the US and Australian dollars are translated as dolar), although nowadays the Singapore dollar is more commonly called dolar in Malay. To differentiate between the three currencies, the Malaysian currency is referred to as Ringgit Malaysia, hence the official abbreviation and currency symbol RM. Internationally, the ISO 4217 currency code for Malaysian ringgit is MYR.
The Malay names ringgit and sen were officially adopted as the sole official names in August 1975. Previously they had been known officially as dollars and cents in English and ringgit and sen in Malay, and in some parts of the country this usage continues. In the northern states of Peninsular Malaysia, denominations of 10 sen are called kupang in Malay ("poat 8 " in Hokkien, "Jiao" 角 in Mandarin), e.g. 50 sen is 5 kupang ("5 poat 8 " in Hokkien, "wujiao" 五角 in Mandarin).
On 12 June 1967, the Malaysian dollar, issued by the new central bank, Bank Negara Malaysia, replaced the Malaya and British Borneo dollar at par. The new currency retained all denominations of its predecessor except the $10,000 denomination, and also brought over the colour schemes of the old dollar. Over the course of the following decades, minor changes were made on the notes and coins issued, from the introduction of the M$1 coin in 1967, to the discontinuation of RM500 and RM1,000 notes in 1996.
As the Malaysian dollar replaced the Malaya and British Borneo dollar at par and Malaysia was a participating member of the sterling area, the new dollar was originally valued at 8.57 dollars per 1 British pound sterling. In November 1967, five months after the introduction of the Malaysian dollar, the pound was devalued by 14.3%, leading to a collapse in confidence for the sterling area and its demise in 1972. The new currency was not affected but earlier notes of the Malaya and British Borneo dollar were still pegged at 8.57 dollars per 1 pound; consequently these notes were reduced in value to 85 cents per dollar.
Despite the emergence of new currencies in Malaysia, Singapore and Brunei, the Interchangeability Agreement which the three countries adhered to as original members of the currency union meant the Malaysian dollar was exchangeable at par with the Singapore dollar and Brunei dollar. This ended on 8 May 1973, when the Malaysian government withdrew from the agreement. The Monetary Authority of Singapore and the Brunei Currency and Monetary Board still maintain the interchangeability of their two currencies, as of 2017.
In 1993, the currency symbol "RM" (Ringgit Malaysia) was introduced to replace the use of the dollar sign "$" (or "M$").
Between 1995 and 1997, the ringgit was trading as a free float currency at around 2.50 to the US dollar, but following the onset of the 1997 East Asian financial crisis, the ringgit witnessed major dips to under 3.80 MYR/USD by the end of 1997 as a result of capital flight. During the first half of 1998, the currency fluctuated between 3.80 and 4.40 MYR/USD, before Bank Negara Malaysia moved to peg the ringgit to the US dollar in September 1998, maintaining its 3.80 MYR/USD value while remaining floated against other currencies. In addition, the ringgit was designated non-tradeable outside of Malaysia in 1998 to stem the flow of money out of the country.
While the printing of RM500 and RM1,000 notes had ceased in 1996 in response to risks of money laundering and capital flight, the underestimated effects of the financial crisis prompted the central bank to completely discontinue the use of the notes in 1999 by demonitising remaining notes in circulation, thereby ceasing to be of legal tender and being only exchangeable directly at the central bank; at the time of the demonetization, RM500 and RM1,000 notes were each worth approximately US$130 and US$260 respectably, based on the 3.80 MYR/USD peg rate. Despite these measures, some 7.6% of RM500 notes and 0.6% of RM1,000 notes remain in circulation as of 30 January 2011. During a 2011 parliamentary session, then Deputy Finance Minister Donald Lim Siang Chai asserted that a total of 150,599 and 26,018 pieces of RM500 and RM1,000 notes (RM75,299,500 worth of RM500 notes and RM26,018,000.00 worth of RM1,000 notes) have yet to be withdrawn through the central bank.
The ringgit lost 50% of its value against the US dollar between 1997 and 1998, and suffered general depreciation against other currencies between December 2001 and January 2005. As of 4 September 2008, the ringgit has yet to regain its value circa 2001 against the Singapore dollar (2.07 to 2.40 MYR/SGD), the euro (3.40 to 4.97 MYR/EUR), the Australian dollar (1.98 to 2.80 MYR/AUD ), and the British pound (5.42 to 6.10 MYR/GBP ).