Removal of ringgit peg boost for travel industry

KUALA LUMPUR - The Malaysian government's decision to scrap the

ringgit peg against the US dollar and float it against a basket of currencies last Thursday are met with cheer by Malaysians as it means cheaper goods, services and travel.



Travel industry personnel welcomed the de-pegging as it means imported foodstuff and goods will now cost less. It will be a boost to the government's efforts to make Malaysia a shopping hub in the region.



Deputy Tourism Minister Datuk Ahmad Zahid Hamidi is confident that

the removal of the ringgit peg would give the tourism sector a fillip

as tourist arrivals are expected to increase and there would be more

investments in the tourism sector.



He added that hotel rates and services are comparatively still the

cheapest in the region. The Malaysian Association of Tour and Travel Agents believe the ringgit de-pegging may lead to stronger demand for long haul travel to the Americas and Europe, which travellers hitherto had shy away from

due to the high exchange rate.



Now with a stronger ringgit, travel to these destinations are more

affordable, it said.



The industry and the consumers however do not expect the benefits to

be immediate as there will be a time lag before the stronger ringgit

would lead to a drop in prices.



"The value of the ringgit changed little since its depegging. At press time the ringgit was quoted at 3.75 against the US dollar. According to traders the ringgit should appreciate in the coming weeks, to RM3.73 against the dollar. Before the de-pegging the ringgit was fixed at RM3.80 against the USD.”