Essay --

How to Increase the Value of Malaysian Ringgit Based on our findings, we reached into the conclusion that there a two significant ways to improve, stabilize and probably increase the value of Malaysian Ringgit internationally. First, the government should maintain the policy of open economy and also considering the usage of gold dinar in the currency system instead of fiat monetary system. Maintain the Policy of Open Economic Malaysia is a small and open economy which involved heavily in international trade. The economic theory suggested by Dornbush (1974) highlighted that the elimination of tariff (greater trade openness) will cause currency depreciation by reducing the price of exportable goods and increase the price of importable goods. Since the results showed that open economic policy can cause the depreciation of RM/USD, Malaysia should maintain the policy of open economic. Open economic policy has successfully raised Malaysia position in the international trade. Currency depreciation increases the competitiveness of Malaysia exporters and encourages domestic producer and importer to venture into cost effective production mode to save costs. Although increase in Malaysia trade balance tends to depreciate RM, but the control of Malaysia on the trade balance is limited as the increase in trade balance depend on the purchasing power of the foreign importers and the competitiveness level too. Results also indicate that increment in domestic interest rate will dampen our exchange rate and increase in money supply, on the other hand, strength the RM. This finding shows that monetary policy is a useful tool in controlling the movement of Malaysian Ringgit. While increase in the interest rate could cause further capital inflows tha... ...ry. The three main factors are the use of gold and silver as a currency, to avoid currency devaluation, and to limit printing of loose money (fulus). In addition, manipulation of currencies and the impact toward one economy could be reduced because of the fact that gold does not inflate in value as it is a commodity and, thus, has an intrinsic value. Dr. Mahathir Mohamad said that gold was also open to some risk of speculation but it was safer than conventional currency which had no intrinsic value and could be manipulated indefinitely (The Star, 2002). All these problems arise because the world went off the Gold Standard. In the International Conference on Gold Dinar Economy 2007, Tun Dr Mahathir noted that in the case of paper people will have risk in losing their value and also purchasing power. He stressed back that only Gold Dinar really has a value in it.