by ANIS HAZIM 

STUDYING overseas has now become very expensive as the Malaysian ringgit continues to depreciate against the US dollar. 

As at Oct 28, the ringgit is trading at 4.7227 versus the US dollar lowest since September 1998. 

However, the weaker currency is also seen in other regional currencies due to the strengthening of the US dollar driven by an increasingly hawkish US Federal Reserve (Fed). 

A Malaysian student at Sheffield Hallam University in the UK, Saiful Hisyam Md Salleh feels the pinch, not only due to the effect of ringgit weakening, but also because of the higher inflation, as well as higher costs of living. 

“After the entire world was afflicted by inflation, the UK was one of the European countries that suffered the most. 

“As a result (from the Russia-Ukraine war), monthly energy bills have soared by more than 50%,” Saiful Hisyam told The Malaysian Reserve (TMR). 

The PhD student noted that the cost of living in the UK is now skyrocketing due to significant price increases in essential items. 

“For example, 5kg of cooking oil now costs £14 (RM76) from £6 before the Covid- 19 pandemic hit. 

“Even though the ringgit exchange rate against the British pound is favourable, it makes little difference because the expenses are more than doubled,” he said. 

The Majlis Amanah Rakyat (Mara) scholarship recipient said that he had to utilise his high-yield savings to fund his education. 

“This crisis is inevitable, particularly for the working class and students such as ourselves. Consequently, investing or attempting to diversify asset portfolios would not be a good choice for me,” he added. 

Meanwhile, Muthanna Saari, who is currently in his first year of PhD at Sussex University in the UK, sees the weakening of the ringgit impacting overseas students’ initial expenditure due to the currency exchange. 

“However, the British pound is also in a weaker position against the US dollar, which might have diluted the weakening of the ringgit,” Muthanna said in an email reply to TMR. 

Nonetheless, he said that there is no doubt that overseas study is expensive due to the exorbitant accommodation rental, spike in utility bills including electricity, gas and water bills, as well as the increasing cost of food. 

“Despite receiving scholarships, the fact that the rate has not been updated with the current situation, means that we will still need to fork out our own money. The decline of the ringgit affected the amount we get from this source,” he noted. 

Therefore, to dwell in the crisis, he said that the overseas students had to exhaust all of their sources of income to cover the costs of living while tightening their spending. “Priority is for the accommodation rental and utility bills, then come food and transportation, and expenses for social activities will come last,” he said.

A third-year student at Sunderland University in UK, Charmaine Shaharin said that overseas students had to live frugally amid the weakening currency. 

According to her, the students had to try their best and go the extra mile to support themselves such as doing part-time jobs. 

Charmaine, who is currently based in Newcastle upon Tyne in the north of England, however, said that the living costs in the north, especially for food and accommodation are essentially lower compared to other parts of the region. 

“It is much more manageable over here. I live off mostly by limiting myself from going out to eat often or shopping. 

“At the same time, I also get my groceries from different places, I do not get all that I need at one place as that would break my bank,” she told TMR. 

She said that living abroad meant that she had to stay frugal and be mindful at all times when it comes to spending. 

“I do not spend too much on leisurely things, while at the same time, I am in the midst of finding a part-time job to earn some extra income,” she said. 

According to AmBank Research, the ring-git has remained weak despite the efforts to stabilise the currency by utilising around US$9.5 billion (RM44.77 billion) of Bank Negara Malaysia (BNM)’s reserves. 

“The currency fell by 13.5% as of Oct 25, despite BNM raising its policy rates by a cumulative 75 basis points (bps) to reach 2.5% until October 2022,” it said in a research note. 

The research house also expects the ringgit to weaken further in the first quarter of 2023 (1Q23) to 4.8 against the dollar. 

However, the ringgit is projected to strengthen against the US dollar from 2Q23 onwards and settle at the 4.4 level in 4Q23 as the greenback is expected to enter a period of cyclical decline. 

“With sharp slowdown or recession risk in the US, we are of the view of potential rate pullbacks by the Fed in the second half of 2023 (2H23). 

“With an estimated reduction of 100bps in the 2H23, this would mean the interest rate differential would drop from a peak of 1.25%- 1.5% to 0.25%-0.5%,” it said. 

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• This article first appeared in The Malaysian Reserve weekly print edition