While China’s economy is on track to becoming the largest in the world, the currency rooted in this economy, the Chinese Yuan Renminbi (CNY, CNH or even RMB) is still considered an exotic currency for some reason. Thus, its pairing with the Malaysian Ringgit is also an exotic one, suited for trading only for the most experienced FX traders. Interestingly, Even the CNY/USD pair is considered to be an exotic one.
The official currency of Malaysia, the Malaysian Ringgit is supported by a services and manufacturing-based economy.
Until recently, the Malaysian economy used to be powered by agricultural goods and mineral based commodities. Indeed, to this day, the country is a sort of LNG and crude oil powerhouse. Having these two essential commodities as part of its “portfolio” has certainly not hurt it.
The same cannot be said about the recent economic crises, which left a lasting impression on the Malaysian economy. This negative effect was most obvious in the capital investments sector, which suffered greatly.
Introduced in 1975, the Malaysian Ringgit replaced the Straits Dollar. Ringgit actually means “jagged” in Malay, in what may be a reference to the serrated edges featured by the coins of the Spanish Dollar. The country also used the Spanish Dollar as its official currency twice before the Straits Dollar.
The Chinese Yuan Renminbi is a currency supported by one of the biggest and most dynamic economies in the world.
That said, its luster is most definitely not what is should be. Central government tampering with the value of the currency may have something to do with this lack of prestige/standing.
China is the top exporter of goods in the world and the second largest importer. That fact alone should clue one in to the importance of the CNY.
In addition to that, the Chinese economy is dealing with low unemployment (in the neighborhood of 4%) and it is still growing at a faster pace than any other economy in the world.
China’s main exports are: steel, medical equipment, textiles, electrical goods, machinery and iron.
While the Chinese economy is many times bigger than Malaysia’s, the correlation between the two currencies is rather obvious. The two countries are geographically close to one another and the economic ties between them are “healthy” to say the least. They are also continuously expanding. Energy is one of the main channels of cooperation between Malaysia and China.
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BUY - rate is expected to increase, i.e. the first currency gains value against the second currency.
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