In a noteworthy development on Tuesday, October 24, the Singapore dollar exchange rate with the Malaysian ringgit achieved a significant milestone by surging past the MYR3.50 mark, according to The Straits Times.
However, at the time of writing, it has since dropped to SGD$1 = RM3.49.
According to data sourced from Bloomberg, the trading day commenced with the Singapore dollar opening at 3.5073 against the Malaysian ringgit, marking a notable increase from the previous day’s closing rate of 3.4910.
At its intraday peak, the exchange rate reached an even higher value of 3.5083.
As the trading day unfolded, by 5:30 PM, the Singapore dollar settled at 3.5028 against the Malaysian ringgit. At an earlier point in the day, the ringgit briefly dipped below 3.50.
According to Bloomberg, a spokesperson for the Bank Negara Malaysia said that the recent trajectory of the Malaysian Ringgit is likely influenced by events happening around the world, and international factors; and not influenced by the economy of Malaysia.
Local money changers have also reported seeing an increase in customers wanting to exchange their currencies, with one local money changer attributing the recent uptick to the strong Sing dollar and the upcoming Deepavali weekend and end-of-year school holidays.
Previous high was RM3.44
It was previously reported that he Singapore dollar saw an increase in value compared to the Malaysian ringgit, reaching a new record high of S$1 to RM3.44 on Thursday, June 8, 2023.
Earlier predictions regarding the weakening of the ringgit are proving to be accurate. Bank Negara Malaysia (BNM), the central bank of Malaysia, had previously suggested that the weakening of the ringgit could be attributed to various factors such as the debt ceiling deadlock in the United States, as well as banking uncertainties in both the U.S. and Europe. Furthermore, the aggressive interest rate hikes implemented by the U.S. Federal Reserve have also contributed to the ringgit’s decline.
Experts who were consulted by CNA at that time explained that the stronger economic fundamentals of Singapore have resulted in the depreciation of the ringgit against the Singapore dollar. Notably, a report by credit rating agency Fitch, prior to the analysis on May 29, stated that Singapore holds a AAA rating while Malaysia has a BBB+ rating.
One significant factor negatively affecting the ringgit is the inconsistent economic recovery of China. Given that China is one of Malaysia’s key trading partners, the weaker-than-anticipated recovery in China’s economy has had adverse effects on Malaysia.
Reports indicate that Malaysia experienced a 1.8 percent decline in exports year on year during the first quarter of 2023, largely attributed to the decrease in exports to China. Furthermore, the ringgit’s value has been hindered by Malaysia’s relatively limited investment opportunities and forthcoming domestic structural reforms.