Strong US Dollar and Economic Factors Drive Currency Movements
The Malaysia ringgit is expected to depreciate further against the Singapore dollar, potentially hitting a rate of S$1 to RM3.45 in the coming months. This follows global economic shifts driven by aggressive US Federal Reserve interest rate hikes aimed at combating inflation.
US Dollar Strength and Global Impact
The US central bank is anticipated to raise interest rates by 0.75 percentage points soon, pushing rates to 5% by March 2023. These rate hikes have bolstered the US dollar to levels not seen since the early 2000s. Consequently, the Malaysia ringgit, among other currencies, has weakened significantly.
The ringgit is currently trading at approximately RM4.74 to US$1 and is projected to decline further to RM4.90 by the end of 2022. Analysts foresee the ringgit potentially sliding to RM5.00 against the US dollar in the first quarter of 2023 due to rising US interest rates and stronger US economic growth.
Singapore Dollar’s Resilience
Meanwhile, the Singapore dollar has demonstrated strength against regional currencies, attributed to the Monetary Authority of Singapore’s (MAS) tightening of monetary policy. Over the past year, the Singapore dollar has depreciated only slightly—about 4.7%—against the US dollar, a solid performance compared to other currencies facing greater declines.
Ringgit vs Singapore Dollar
The Singapore dollar has appreciated steadily against the ringgit, reaching a record high of S$1 to RM3.36. Projections indicate that it could rise further to RM3.35–RM3.45 in the coming months, supported by Singapore’s strong monetary policy and the ringgit’s vulnerability to external pressures.
Malaysia’s central bank, Bank Negara Malaysia, is expected to raise interest rates by 0.25 percentage points to curb inflation and stabilise the ringgit. However, analysts suggest that these measures might not be sufficient to counteract the broader economic forces driving the ringgit’s decline.
Travellers from Singapore to Malaysia might find this an opportune moment to maximise their purchasing power, with the exchange rate favouring the Singapore dollar amidst ongoing economic shifts.
