SINGAPORE: Bloomberg reported on Feb 8 that as the Singapore dollar marks another high against the Malaysian ringgit, shoppers in Singapore are crossing the border, especially due to the Lunar New Year season.
The exchange rate was at MYR3.55 to S$1 early on Wednesday morning (Feb 7) but went back to MYR3.5405/3.5455 to S$1 at the end of the trading day. This came just a few days after the previous all-time low of MYR3.5418 to S$1.
Nevertheless, analysts in Malaysia appear to believe that the ringgit may have reached its weakest point, at least against the US dollar.
“Given the stronger US economy and the potential for higher (treasury) yields, the short-term pressure could exert negative pressure on the ringgit. As a result, we may witness an overshoot to 4.78-4.80 against the US dollar,” SPI Asset Management managing director Stephen Innes is quoted as saying in Malaysia’s Business Times.
The ringgit has been having a tough time since last year when it was widely considered one of Asia’s worst-performing currencies.
The poor performance of Malaysia’s currency is partly due to the after-effects of the pandemic, the slowing down of the economy of Malaysia’s biggest trading partner, China, lower commodity prices in general, and political instability.
In contrast, the SGD has stayed strong. Over the past year, the Singapore dollar has appreciated by 9.16 per cent; in the last six months, by 4.41 per cent, noted Mothership on Feb 3.
In January, the Singapore dollar reached an all-time high against the Philippine peso and Indonesian rupiah.
Khoon Goh, the head of Asia research at Australia & New Zealand Banking Group, is quoted by Bloomberg as saying, “It is a simple gauge of relative living standards. Based on the historical trend in the Singapore dollar-ringgit exchange rate so far, the question is when we could reach 4.”
The Bloomberg piece went on to say that Singaporeans going to Malaysia for some CNY shopping are grabbing seasonal favourites such as bak kwa and pineapple tarts at sometimes half the price of what they would pay back home.
Nevertheless, others are expressing confidence that it’s time for the ringgit to bounce back and that a long-overdue correction is coming.
“I believe that the ringgit is poised to stage a rebound given that China’s government is likely to come up with a forceful economic stimulus,” Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid is quoted in Malaysia’s BT as saying. /TISG
Read also: 1SGD = 3.5418MYR in all-time low for ringgit