News

M’sia Ringgit Now So Cheap, Some Money Changers Aren’t Selling It

2022-08-06 , 11:58 am

For those who’ve been keeping track of the various currency exchange rates because your year-end trip depends on which country’s currency is cheaper to buy, you’re probably aware that S$1 can get you RM3.23 now, the strongest that the Singapore dollar has ever been against Malaysian Ringgit.

And for your reference, the exchange rate was S$1 to RM3.0857 at the start of the year.

However, despite the record-high exchange rate that’s clearly making the Malaysian currency even more popular than it already is, it seems like some money changers in Singapore have halted their selling of ringgit for now.

With some money changers inputting their selling rates for ringgit at 0, you might be wondering why money changers aren’t jumping at the opportunity to sell more ringgit to Singaporeans, given that most Singaporeans would probably want to exchange their Singapore dollars for ringgit at a time like this.

Here’s why, and it’s not because the sellers have sold out all of their ringgit.

Low Profit Margin for Money Changers

When The New Paper spoke to money changer owners, multiple owners cited the low profit margins as the main reason behind not selling ringgit.

Mr San Kabeer and Mr Mohammed Ismail, owners of Universal Money Xpress and Hasan Trading Money Exchange respectively, claimed that the little profits that they earn from selling ringgit has prompted them to stop selling the currency.

Mr Mohammed Ismail also mentioned that there is much labour involved in selling such a sought-after currency, making the cost outweigh the benefit even more for him.

Additionally, Mr Vanchilabbai Sharifdeen, the owner of VS Exchange, revealed to The New Paper that money changers only earn around $10 to $30 for every RM100,000 (approximately S$30,947) that they manage to sell.

He also shared that the increase in the number of customers in Singapore seeking to exchange their Singapore dollars for Malaysian ringgit does not equate to greater profits for money changers in Singapore.

On the other hand, some money changers have decided to continue selling and stocking up on ringgit, but in much smaller quantities due to the low profit margin.

One such money changer is Dazzling Xchange, with one of its employees mentioning that the money changer sometimes ends up making a loss when it sells ringgit.

The exact figures were not disclosed.

However, the employee also explained that Dazzling Xchange is still continuing to sell ringgit due to the high demand for it, and that gaining some profit is still better than having no profit at all.

Mr Rahmed, an employee of Golden Jinna, also told The New Paper that money changers will have to sell millions of ringgit in order to earn enough profit, and that such a goal is extremely difficult for smaller money changers to achieve.

Long Queues

Apart from the low profit margin, another factor that money changers have taken into account is the long queues, which can be taxing on the money changers throughout the days.

Mr San Kabeer, who runs Universal Money Xpress with a partner, pointed out that it is strenuous for just two people to deal with the snaking queues and high demand.

Coupled with the low profit margin, he has decided that selling Malaysian Ringgit is not worth it for him.

Apart from that, Mr Sharifdeen also explained that in The Arcade, where many money changers are located, the money changers experience an oversaturated market and stiff competition.

This has led to the money changers lowering their exchange rates in order to attract customers, causing them to earn even less profit.

With some of the lowest exchange rates in Asia, these money changers experience even longer queues.

Unstable Currency Resulting in Losses

Other money changers also talked about how the Malaysian Ringgit is currently unstable since it is falling on a near-daily basis, leading to money changers being put in a precarious state if they choose to sell ringgit.

Since money changers purchase currency before they can sell it, they usually end up having to sell ringgit for a cheaper rate as compared to when they purchase it.

Mr Rahmed also shared that money changers have “no choice” but to sell ringgit at a lower rate as compared to when they purchase it, prompting his employer to stop stocking up on ringgit so often.

Currently, his workplace usually stocks up on ringgit for them to sell it to other money changers at wholesale prices if other money changers require the currency.

He also mentioned that they do this to “clear stock”.

And while many money changers have chosen to not sell or purchase ringgit, at least two of the money changers who spoke to The New Paper said that they will still accept transactions from customers who would like to sell their ringgit in exchange for Singapore dollars.

Singaporeans Purchasing More Malaysian Ringgit

While some Singaporeans scrambled to purchase more ringgit at a cheaper rate, most of the customers that The New Paper encountered only exchanged around $300 to $500 to ringgit.

Most of them were preparing to take road trips across the causeway to Malaysia during the National Day long weekend.

On the other hand, Mr Sharifdeen also shared that he encountered one customer who chose to exchange $30,000 to ringgit in one transaction.

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Many Consumers Now Turn to Use Credit Cards in M’sia

On the other hand, The New Paper also found out that many Singaporeans have chosen to use their credit cards instead of cash when they visit Malaysia.

However, some of them will still bring in some ringgit with them “just in case”.

Individuals interviewed by The New Paper also expressed that they do not splurge more while in Malaysia despite the ideal exchange rates, and this is largely due to other factors such as inflation.