The Singapore dollar has reached new heights against the Malaysian ringgit, with an exchange rate of S$1 to RM3.5725 on Wednesday, February 21, at 9:45 am. This surpasses the previous record of S$1 to RM3.56, set just two days earlier on February 19. Over the past year, the Singapore dollar has appreciated by 8.05% against the ringgit.
The Malaysian ringgit has been under pressure due to poor export performance and the rising U.S. interest rates, causing it to fall by more than 4% in 2024. On Tuesday, February 20, the ringgit dropped to its lowest level since the Asian financial crisis meltdown in January 1998, reaching almost RM4.80 to US$1.
Malaysia’s central bank governor, Abdul Rasheed Ghaffour, issued a statement on Tuesday in an attempt to calm the markets. He acknowledged that the current level of the ringgit does not reflect the positive prospects of the Malaysian economy, attributing the currency’s performance to external factors such as U.S. rate hikes, geopolitical concerns, and uncertainty about China’s economic prospects. Ghaffour expressed optimism that the expected growth in global trade and Malaysian exports would have a positive impact on the currency this year.
The ringgit previously hit its lowest point since the Asian financial crisis in 2016, a result of emerging market currencies being hammered by capital flight due to an expected rise in U.S. interest rates. Malaysia’s second finance minister, Amir Hamzah Azizan, in his maiden interview with Bernama state news agency on Monday, anticipated the currency to strengthen against the dollar after U.S. authorities signaled an end to rate hikes. However, he declined to forecast the year-end target for the U.S. dollar-ringgit exchange rate.
Azizan emphasized that the hard work done by the prime minister and finance minister to bring in foreign direct investments would also contribute to strengthening the local economy, ultimately improving the ringgit.
The recent appreciation of the Singapore dollar against the Malaysian ringgit has significant implications for businesses and individuals with cross-border transactions between the two countries. As the situation continues to unfold, market participants will closely monitor any further developments and policy responses from both countries’ central banks.