The Singapore dollar has risen to its highest point yet against the Malaysian ringgit since July 2023.
According to Bloomberg, the Singapore dollar peaked at RM3.4826 on Oct. 20, 2023, while Google gave a figure of RM3.4813.
Google showed that the exchange rate fell back to RM3.4713 by the end of the day.
Previously, on Jul. 12, 2023, the exchange rate hit a record high of S$1 to RM3.50.
Screenshot via Google
Decline in exports, interest rate gap with the U.S. have contributed to the ringgit's weakening
Bloomberg further reported that a slowdown in China has partially contributed to seven consecutive months of a decline in Malaysia's exports.
In addition, the ringgit has been hit by a widening interest rate gap with the U.S., according to Nikkei Asia.
Thus far, Malaysia's central bank, Bank Negara Malaysia, has raised interest rates only once for the year, to three per cent in May.
In comparison, the central banking system of the U.S., the Federal Reserve, lifted interest rates to between 5.25 to 5.5 per cent.
These higher interest rates in the U.S. have, therefore, led to capital outflows from Southeast Asia as investors seek better returns.
Ringgit fell to its lowest against the U.S. dollar since 1998
All of these have made the ringgit the worst-performing currency in Southeast Asia and the second-worst performer in Asia after the Japanese yen, according to Bloomberg.
Bloomberg reported that on Oct. 4, the ringgit fell to its lowest level against the U.S. dollar since 1998, with US$1 being the equivalent of RM4.76.
On Oct. 10, Malaysia's Prime Minister, Anwar Ibrahim, was quoted by Nikkei Asia as saying that the government is looking at initiatives to trade in local currencies to reduce reliance on the U.S. dollar for trade and investment.
This has included using the ringgit in transactions with Indonesia, Thailand and China, according to The Malay Mail.
Top photo via Google & Polina Tankilevitch/Pexels