Many people here are expected to throng money changers these few days as the Singapore dollar has strengthened against the Malaysia ringgit, hitting a record high of S$1 to RM3.5343 on Jan. 23 — only to hit another high of S$1 to RM3.5411 on Jan. 24.
The rate has since fallen to S$1 to RM3.527 on Jan. 26.
Shin Min Daily News reported that several money changers they spoke to said the favourable exchange rate — S$1 to RM3.492 — will likely be maintained for a few days at least.
They added that they have sufficient supply to meet demand even as the festive season nears.
The demand for ringgit is likely due to the upcoming Chinese New Year period, with Singaporeans heading to Malaysia to stock up on goodies, and with Malaysians, who get paid in Singapore dollars, heading back to visit their families.
Previously, in May 2023, when the exchange rate hit a then-high of S$1 to RM3.41, money changers in Singapore were low on supply.
Money changers have enough supply
One money changer that Shin Min spoke to, Crante Money Changer, shared that although there is demand all year round, most Singaporeans or Malaysians who work in Singapore would not typically exchange a lot of ringgit at one go.
City Money Changer shared that the exchange rate is not surprising, but they believe it will not last long, predicting a drop in the weeks to come.
Singapore dollar to strengthened against U.S. dollar, weaken against Asian currencies
Saktiandi Supaat, Maybank's regional head of foreign exchange research and strategy, predicts that the Singapore dollar will remain strong against the Malaysian ringgit for the upcoming month, reported Lianhe Zaobao.
Saktiandi added that he predicts it will hit approximately S$1 to RM3.50 by the end of the first quarter of 2024.
Peter Chia, senior foreign exchange strategist at UOB, said he anticipates that the exchange rate will be at S$1 to RM3.42 by the end of 2024, according to Zaobao.
Zaobao also reported that the Singapore dollar is expected to strengthen against the U.S. dollar in 2024 as interest rate cuts are expected in the United States.
The interest rate cuts will allow Asian currencies, such as the Japanese yen, to strengthen against the Singapore dollar.
The Singapore dollar will strengthen against the U.S. dollar as a result, but weaken against the Asian currencies.
However, the Monetary Authority of Singapore can adjust exchange rate policy accordingly by taking guidance from core inflation figures, such as by maintaining the strength of the Singapore dollar to maintain prices of imports, it was also reported.
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Top image via Daniel Seow and Shin Min Daily News.