The power and relevance of the currency

In today's fragmented global economy, the currency operates both as a mirror and a lever. It mirrors domestic discipline: fiscal prudence, policy coherence, and political stability. Simultaneously, it serves as a lever of international influence. Just as the U.S. dollar dominates global finance—not because of intrinsic value but due to the United States' unmatched military reach, economic depth, and institutional trust—so too do rising powers strive to internationalize their currencies as a path to autonomy and prestige.

The Chinese renminbi, despite its relative weakness in convertibility, is gradually gaining status through trade settlement, swap agreements, and digital innovation. Beijing understands what Washington has long wielded: currency power is system power. To control the rules of the global financial game is to shape the choices of nations. When the dollar is used to sanction rivals, it demonstrates the dollar's weaponization—its ability to coerce behaviour, isolate economies, and enforce a moralized vision of global order. Yet, this same weaponization risks accelerating the search for alternatives. De-dollarization efforts by BRICS, Gulf states, and others—though nascent—reflect a growing discomfort with monetary unipolarity.

For smaller states like Malaysia, Indonesia, or the Philippines, currency strength must be carefully cultivated. It cannot be reduced to exchange rate manipulation or interest rate tweaks. A strong currency requires a robust export sector, prudent debt management, and, crucially, investor confidence that governments will not arbitrarily intervene in markets. In the case of Malaysia, the ringgit's performance is intimately tied to both its external trade dynamics and internal political consistency. With Trump’s second administration resetting tariff regimes and global markets, any volatility in the ringgit will have magnified repercussions for trade-dependent sectors, particularly electronics, semiconductors, and palm oil.

Indeed, the recent resilience of the Malaysian Ringgit deserves deeper reflection. While currency value is often treated as a mere statistic in public discourse, it is, in truth, the most visible indicator of market confidence. That the Ringgit has stabilised below RM4.20 against the U.S. dollar – despite global headwinds and volatile commodity prices – signals an underlying strength in Malaysia’s macroeconomic fundamentals. Anchored by diversified exports, improved fiscal discipline, and ongoing institutional reforms, the Ringgit acts as a shock absorber in an increasingly fragile international system. But this resilience must not be taken for granted. The credibility of the Ringgit rests not only on global demand for Malaysian goods but also on the domestic political narrative. Any regression into policy inconsistency, populist spending, or investor-unfriendly rhetoric would risk reversing hard-won gains. As such, defending the Ringgit is inseparable from defending institutional integrity and coherent economic governance.

Currencies are also instruments of national dignity. When Lebanon’s pound or Zimbabwe’s dollar collapses, it is not just an economic failure; it is a national humiliation. The people see their lifetime savings evaporate, their purchasing power destroyed, and their futures erased. Trust in the currency is thus trust in the state. If governments cannot protect the value of money, they cannot claim to protect the lives and livelihoods of their citizens.

Digital currencies are now redefining this terrain. Central Bank Digital Currencies (CBDCs), from China's digital yuan to the proposed digital euro, represent the next frontier of monetary power. These currencies aim not only to modernize transactions but to circumvent existing global infrastructures like SWIFT, dominated by the West. They are designed to secure national monetary ecosystems against external shocks and sanctions, while creating new payment corridors insulated from the dollar.

But digital does not automatically mean democratic. These new instruments may concentrate power even further in central authorities. The geopolitical consequences are vast: just as naval dominance defined empires of the past, digital currency ecosystems may define influence in the coming decades. Who gets to transact, with whom, and on what terms will be shaped less by market efficiency than by technological control and strategic alignment.

ASEAN, for all its efforts at regional integration, has not yet built a common currency or financial architecture capable of insulating it from global volatility. The Chiang Mai Initiative, the ASEAN+3 Macroeconomic Research Office (AMRO), and bilateral swap arrangements are useful, but insufficient in the face of coordinated external pressures or capital outflows. Strengthening the currency relevance of ASEAN will require more than financial tools—it will require political will to coordinate monetary policies, reduce dollar dependency, and push for settlements in local currencies.

Ultimately, the power and relevance of currency cannot be separated from the broader questions of legitimacy, discipline, and strategy. A country that lives beyond its means, that borrows without restraint, that tolerates corruption, or that indulges in political brinkmanship will always see its currency punished.

Conversely, a country that plans for the long term, invests in its people, and sustains confidence in its institutions will be rewarded—both by markets and history.

Currency, then, is not just money. It is national narrative, political capital, and geopolitical instrument. As the global monetary order shifts amid war, sanctions, climate shocks, and technological disruption, the wise state is the one that defends its currency not through slogans or denial but through strategic coherence and moral credibility. In the twenty-first century, as in the twentieth, currencies will continue to speak louder than words.

Regardless of how underwhelmed some may be on any economic performance or generosity of a country, the key remains the strength of the currency. When the announcement of Anwar Ibrahim, the Prime Minister of Malaysia, did not immediately hit a chord with most Malaysians on July 23, it is to understand that the performance of the Malaysian Ringgit has remained stellar to this date. At USD 1 to less than RM 4.20, the Ringgit is indeed insulating Malaysian economy from deeper mayhem.

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