More expensive holidays overseas? Say it ain’t so (excerpt):
PETALING JAYA: Cheap airfare is a boon for holidaymakers going overseas, but Malaysians can’t help but feel a little short-changed after a trip to money changers.
Take the Thai baht, which had advanced 13.2% over the past six months. At 8.93 last week, the baht is at its most expensive against the ringgit since 2007.
Jakarta would have been a cheaper destination, currency wise, as the rupiah performance was tempered by Bank Indonesia’s unexpected interest rate cut last Tuesday. At current exchange rate, you can get around 3,500 rupiah for one ringgit. Six months ago, one ringgit will buy you 3,650 rupiah.
Hong Kong, a favourite shopping destination for many Malaysian, has become 15% more expensive since August last year. The Hong Kong dollar is pegged to the US dollar, against which the ringgit had weakened to 3.647 on Wednesday, before the market closed for the Chinese New year holidays....
A couple of comments here:
- Foreign holidays that are more expensive are probably only a preoccupation for the top 20% of Malaysian income earners, maybe 30% if we’re generous. The median Malaysian salaried worker earns just around RM1600-Rm1700 a month – for the majority of Malaysians, I don’t think shopping holidays to Hong Kong are the norm. Preserving jobs and businesses by allowing the Ringgit to depreciate makes a lot more sense here;
- If you decompose the Ringgit’s multilateral movement vis-a-vis its movements against the US Dollar’s and juxtapose with the US Dollar’s overall movements, about 3/4ths of the depreciation of the USDMYR can be explained by the strength of the USD alone rather than weakness in the MYR (index numbers; 2000=100):
If foreign holidays are really a concern, here’s some travel suggestions (cross rates; index numbers; 2000=100):
Yen/Ringgit hasn’t been this high in nearly a decade; Europe will get cheaper when QE begins in earnest next month; and the Aussie authorities are busy talking down their own currency. Despite the fact that the MYR has lately been a little weaker against the IDR, one Ringgit buys nearly a third more Rupiah than a decade ago.
If you’re looking further afield (and have the money to spare), you might want to try Mexico, Canada and Turkey. And for the seriously adventurous, there’s always Russia (50%+ down against the USD since the middle of last year).