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The Singapore dollar has continued to appreciate against the ringgit as it hit a new record high of S$1 to RM3.46 on Thursday, June 15, 2023.

According to Bloomberg data, the last time the Singapore dollar broke its record against the Malaysian ringgit as it touched 3.4102 was on May 24 -- slightly more than three weeks ago.

The Singapore dollar has appreciated some 8 per cent from about 3.19 a year ago.

The continued strengthening of the Singapore dollar was previously predicted.

Queue forms at money changer

And like clockwork, there was a queue for ringgit at a money changer in Northpoint City in Yishun on June 15, at around 7pm.

The money changer was offering a S$100 for RM342 exchange rate.

There were about a dozen people in line.

Predictions of ringgit weakening coming true

Malaysia’s central bank Bank Negara Malaysia (BNM) said some three weeks ago that the ringgit's weakness could be attributed to the debt ceiling impasse in the United States, as well as banking turmoil in the U.S. and Europe.

The ringgit's weakness was also attributed to the U.S. Federal Reserve’s highly aggressive interest rate hikes.

Analysts that CNA spoke to then said stronger fundamentals in the Singapore economy has led to the ringgit weakening against the Singapore dollar.

It was pointed out that the report released by credit rating agency Fitch -- prior to the May 29 analysis -- stated that Singapore was rated AAA while Malaysia was rated BBB+.

One main ongoing issue plaguing the weaker ringgit is that China’s ongoing economic recovery has been patchy.

China is one of Malaysia’s largest trading partners, hence, with China’s economic recovery not as strong as hoped, Malaysia would feel the effects, it was explained.

It was further reported that Malaysia’s exports had contracted 1.8 per cent year on year in the first quarter of 2023, and that this could largely be attributed to the decline in exports to China.

It was also explained that Malaysia’s relatively weaker investment opportunities and impending structural reforms domestically have held back the ringgit’s value.

However, Malaysia's fundamentals are sound and strong, at least one analyst pointed out.

It was also explained that the Monetary Authority of Singapore (MAS) monetary policy framework is exchange rate based.

It is currently set to be on an appreciating path against an undisclosed basket of currencies.

This is unlike Malaysia's monetary policy, which is an interest rate policy.

One prediction three weeks ago was that the ringgit could eventually weaken to 3.45 against the Singapore dollar in the near term.

At current levels, the prediction appears to be coming to pass.

Top photos via Josh Lee