Money changers at The Arcade shopping mall, located at Raffles Place, were offering a S$1 to RM3.505 exchange rate amidst the Singapore dollar hitting a historic high of S$1 to RM3.5489 on Thursday, Feb. 8.

Changed at a rate of S$1 to RM3.505

A photo of a receipt showing the latest exchange rate at one such money changer was uploaded to a Facebook group by Simon Tan, who said he had exchanged S$1,000 for RM3,505.

Tan also said the shop he had changed his money at was offering slightly better rates than other shops which had an exchange rate of S$1 to RM3.50 or 3.502.

The previous record for the exchange rate was S$1 to RM3.5418 on Feb. 2.

This means that the ringgit has depreciated by about 10.5 per cent against the Singapore dollar over the last year, according to The Business Times.

Interest rate gap with U.S. putting pressure on ringgit

According to Bloomberg, the ringgit is under pressure from weaker exports and Malaysia's "wide" interest rate gap with the U.S.

Malaysia's exports have been affected by China's patchy economic recovery, according to The Straits Times.

As for interest rates, Reuters reported that Malaysia's central bank, Bank Negara Malaysia, is maintaining the country's interest rate at 3 per cent.

In comparison, the interest rate for the U.S. is being maintained by its central bank, the Federal Reserve, from 5.2 to 5.5 per cent.

The ringgit has also been affected by years of equity capital outflow and political tumult.

Meanwhile, the Monetary Authority of Singapore (MAS) said that it will maintain the current rate of appreciation of the Singapore dollar nominal effective exchange rate (S$NEER) policy band on Jan. 29.

This sustained appreciation of the policy band will continue to dampen imported inflation and curb domestic cost pressures, thus ensuring medium-term price stability, MAS added.

The current rate has been maintained by MAS since October 2022 after it tightened its monetary policy five times within 12 months.

Will the exchange rate eventually reach S$1 to RM4?

The head of Asia research at Australia & New Zealand Banking Group, Khoon Goh, was quoted by Bloomberg as saying, "Based on the historical trend in the Singapore dollar-ringgit exchange rate so far, the question is when we could reach four."

However, the chief economist of Bank Muamalat Malaysia, Mohd Afzanizam Abdul Rashid, gave a more bullish assessment of the ringgit, saying:

"I believe that the ringgit is likely to stage a rebound today given that China's government (is) likely to come up with a forceful economic stimulus amidst critics that the government is not doing enough to bolster investors confidence."

Top left photo via Google, right photo by Simon Tan via PROFESSIONAL PHV DRIVERS SINGAPORE:Grab, Gojek,Tada n Ryde/Facebook