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The Singapore dollar reached an all-time high against the Malaysian ringgit on the morning of May 23, according to a CNA report.

According to CNA, the Singapore dollar reached a high of RM3.1964 before easing to RM3.1950 later that day.

According to the currency converter site, XE, the Singapore dollar is currently at a high of RM3.1975.

Earlier in April, some money changers in Singapore actually ran out of ringgit due to the high demand.

An analyst had predicted then that the lowest the ringgit was expected to go for 2022 would be 3.18.

The land border between the two countries opened on April 1.

Malaysian ringgit depreciating for years

The Malaysian ringgit has been depreciating against the Singapore dollar since 2018.

In July 2015, the ringgit was already considered to have been trading at a low when it hit RM2.81 to S$1, which makes the current rate unprecedented.

But the weakening of the Malaysian ringgit is due to differing monetary policies pursued by the Singapore and Malaysia central banks at the moment.

Singapore has pursued a more aggressive monetary policy by appreciating the Singapore dollar at a faster pace and at a higher level, while Malaysia has maintained a relatively neutral stance to combat inflation, CNA cited of analysts.

The Monetary Authority of Singapore (MAS) tightened its monetary policy three times in the last six months.

CNA also pointed to the strengthening Chinese yuan, buoyed by speculation that U.S. President Joe Biden could be ending tariffs on China, as another reason for the strengthening Singaporean dollar.

The yuan "holds the largest share" in the Singapore Dollar Nominal Effective Exchange Rate (S$NEER) basket of currencies, and its rally pushed the Singapore dollar higher due to the actions of currency traders.

Image from Getty