Malaysia’s ringgit has been in a steady decline this year, with some analysts saying the weakening of the currency may continue until 2019.
Last April, the value of the ringgit was at RM 2.936 to one Singaporean dollar, and by Thursday, December 20, it had fallen to RM3.0525 to S$ 1.
Singapore’s daily, The Straits Times, was quoting an analyst from Fitch Solutions, who said that the ringgit’s loss of value against the Singapore dollar could be due to several factors, including the strength of Singaporean currency, the decrease in the price of oil, as weak as the current political situation in Malaysia.
ST reports that Chua Han, the head of Asia Country Risk at Fitch, said, “The ringgit will weaken due to continued political and policy uncertainty in Malaysia brought about by the ruling Pakatan Harapan coalition.”
However, the decline of the ringgit means greater purchasing power for Singaporean holidaymakers who will be spending time in Malaysia at this point in the year. It also spells good news for moneychangers across the nation.
The strength of the Singaporean dollar is also good news considering current limits of food imports from Malaysia, such as fish and eggs. Malaysia announced some weeks ago that it was considering limiting or ceasing importing eggs to make sure there would be enough eggs in its domestic market.
CIMB Private Banking economist Song Seng Wun told ST, “The stronger Singdollar is definitely handy in containing imported food inflation, especially from Malaysia.”
But the Malaysian government sought to assure everyone of its proactive stance regarding the matter, when Amiruddin Hamzah, Malaysia’s Deputy Finance Minister said earner this week that the government would work with Bank Negara Malaysia to “make sure that the ringgit is stable via proactive measures to ensure sufficient liquidity and a resilient market”.
”In the long term, the ringgit value would be driven particularly by the strength of the country’s economic fundamentals. Hence, Malaysia needs to focus efforts on increasing its economic resilience by diversifying revenue sources, and strengthen its fiscal position,” the deputy minister added.