The factors of ups and downs in currency

As we know, nowadays our country Malaysia is having a tough time due to currency reduction. Ok. Firstly, I like to share something about currency where basically the values of currency are being measured by comparing it with foreign currency. Yeah…usually currency in this world will compared the value of currency with United State dollars. This is because; United State dollars are being used widely in this entire world for international trading.

Every currency have it value beside it also have other function such as medium of   converter and saving value. However, it functions as saving value causes it be an assets. The value of currency had been decided by the demand and supply of the currency itself in the market. If occur any demand in export transaction from Malaysia to other countries so the importer will definitely need our money to make the payment and it will lead increase in demand for the currency if there are fixed in supply for the currency and vice versa.

Other than that, the demand of the currency can occurred because of its function as assets. It will be used in investment where investment can be divided into two which are long term and short term investment. The example of long term investment is when the foreign investors want to do the investment in Malaysia. Contrarily with short term investment where it get the profit from the changes in the rate of interest and changes in share market.

In addition, Bank Negara also play it role due to balance the currency. How Bank Negara play it role??? Bank Negara will used international reserve by decreasing it and the amount of currency in market will decrease. Bank Negara buys “Ringgit Malaysia” with international reserve. Thus, the value of “Ringgit Malaysia” will increase compared to United State Dollars because the supply of “Ringgit Malaysia” decrease in the market and vice versa.

So, that all from me and I hope you all can gain knowledge from this sharing.