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In The Star Bizweek today yesterday, there’s this piece on the ringgit upwards revaluation and how it is good for the entire economy. The idea because the Mahathir-era devaluation is that 1) exports is the key to development, and 2) the currency has to devalue to make exports work.

If the ringgit halves in value against the dollar, for example, exports don’t halve in prices (in dollars). Yes, exports would definitely become cheaper, but exporters have to compensate for higher costs (like imported inputs). And the reduction of export price all doesn’t come free: the rest of the economy pays. Real wages drop, other firms struggle, inflation rises.

Yes, exports are important for development. But evaluation props up export companies in markets that, really, we have no comparative advantage in. So what are their net value to the economy? Why should other firms and people pay for them?

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