Singaporeans always keep a close eye on the exchange rate between the Singaporean Dollar (SGD) and the Malaysian Ringgit (RM).
The slightest increase in the exchange rate will lead to long queues at money changers, with kiasu Singaporeans looking to make the most of their money.
In October, the Singapore dollar achieved an unprecedented high, reaching 3.5086 against the Malaysian Ringgit.
If that seemed impressive, the SGD has now broken its own record.
The SGD achieved an all-time high of S$1 to RM3.53 against the Malaysian Ringgit on Wednesday (13 December 2023).
Although it dipped slightly to S$1 to RM3.51 on 14 December 2023, it still presents an excellent opportunity for currency exchange.
Given the ongoing December holiday season, converting your Singapore dollars into Malaysian Ringgit is all the more enticing.
Even if you’re not planning an extended vacation during the holiday season, a quick weekend trip to Malaysia could be a great way to take advantage of the favourable exchange rate.
According to Google, the Singapore Dollar began its upward trend after briefly falling from S$1 to RM3.50 on 3 December.
Before this, the SGD had touched the S$1 to RM3.50 threshold a few times, notably in July, October, and November 2023.
Factors Behind the Strength of the Singapore Dollar Against the Malaysian Ringgit
Speaking to Free Malaysia Today, Afzanizam Rashid, Chief Economist at Bank Muamalat Malaysia Bhd, highlighted that the ongoing depreciation of the Malaysian Ringgit against the Singapore Dollar can be attributed to the distinct approaches adopted by the two countries in addressing inflation.
The Monetary Authority of Singapore (MAS) actively intervenes in the foreign exchange market to maintain the Singapore Dollar’s exchange rate within a specified policy band, especially concerning the US Dollar.
Conversely, Malaysia does not engage in similar intervention practices with the Ringgit.
Malaysian Ringgit Value Falls Against US Dollar
The Malaysian Ringgit is not only falling in its exchange rate with the Singapore Dollar but also with other currencies.
According to The New Straits Times (NST), the Ringgit experienced a decline from US$1 to RM4.7 on 13 December 2023 as well.
This drop can be attributed to two primary factors.
First, it was influenced by the decrease in oil prices, which followed the release of inflation data in the United States.
Stephen Innes, the Managing Director of SPI Asset Management, explained that the data indicated a 0.1% increase in inflation from October to November, which exceeded economists’ expectations of unchanged prices.
Consequently, oil prices dropped by over 3% in response to this data.
The second factor is related to the implications of this data on the US Federal Reserve’s interest rate policy. Innes suggested that this information implies the Federal Reserve is unlikely to reduce interest rates in the first quarter of 2024.
The Federal Reserve has established interest rates in the US at a range between 5.25% and 5.5%, as reported by Reuters.
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