SINGAPORE: On Oct 24, the Singapore dollar recorded an all-time high against the Malaysian ringgit when it reached MYR3.5086 to S$1. The ringgit has recovered slightly since then and is now at MYR3.48 to S$1.
While there have been recent articles in the news about how Malaysians working in Singapore take advantage of the “worthwhile” exchange rate, they’re not the only ones who’ve gained an advantage. Interestingly, for the city of Johor Bahru, the nearest to Singapore, the low ringgit—high Singdollar situation is a mixed blessing.
Singaporeans who will benefit
The biggest winner may be Singaporeans, quite naturally. With the currency having greater purchasing power, getaways across the border for shopping, food trips, and sightseeing are more affordable than ever. Several items are at least 20 per cent cheaper in JB than in SG, and with the cost of living in Singapore having gone through the roof in the past few years, no one can complain about Singaporeans who want to take advantage of this.
Items more affordable in JB include contact lenses and eyeglasses, drugstore cosmetics and other paraphernalia, over-the-counter medication, sanitary products, toothpaste, bak kwa, mooncakes, and other pastries. Services including manicures, pedicures, haircuts, and facials, plus massages and even dental procedures, as well as movies, are also cheaper, this recent Seedly blog entry says.
Johoreans who will benefit
As mentioned earlier, Johor residents who work in Singapore are also reaping the benefits of a stronger Singdollar because they have a lower cost of living but now bring home a higher salary. This should make early wake-up times, long commutes, and reduced personal time worth it.
But the demand for cheaper products and services can also bring a negative effect on people who live in Johor, as it can cause prices to spike, especially if the supply of these goods and services is unable to keep pace with the demand, finance site dollarsandsense pointed out on Nov 1. For those working in Johor, this may only be a small issue, but for people who don’t earn in Singdollars and are already affected by the weaker ringgit, this means more financial difficulties.
Singaporeans winners & losers
However, another group of people who stand to gain with the strong Singdollar against the ringgit is Singapore companies that do business in Malaysia, dollarsandsense added. This is because they now pay less for their operations there.
And one more “loser” in this scenario is Singaporeans who have invested in Malaysian assets. This group may be a sizable one, as Singapore was one of the biggest sources of foreign direct investment last year. /TISG
Read also: Malaysian Ringgit Drops to Lowest Level Since 1998 Amidst Rising US Dollar