Ringgit slumps to record low of 3.41 against the Singdollar

This article is more than 12 months old

May 24, 2023 10:45 pm

The Malaysian ringgit continued to weaken against the Singapore dollar and slumped to a fresh low of 3.4102 on Wednesday. Earlier in the week, it fell from 3.38 on Monday to 3.39 on Tuesday, Bloomberg data showed.

The previous low of 3.3764 was seen last November.

With the latest drop, the ringgit’s value has decreased by 4.15 per cent since the start of the year.

Maybank chief forex strategist Saktiandi Supaat said the ringgit is expected to breach a new low of RM3.45 against the Singdollar within one month if commodity prices soften further, China’s economic growth slows down and the greenback’s strength continues.

Speaking to The Straits Times, he said: “Weaknesses in commodity prices of crude oil and crude palm oil in the light of increasing global economic concerns have likely affected sentiment towards the ringgit in recent times.

“The strength of the US dollar on the back of either safe-haven support or the United States Federal Reserve’s hawkish signals will also likely weigh on the ringgit.”

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He added that weakness in China’s economy also risks weighing on the ringgit, given the large trade exposure Malaysia has to China.

In 2022, trade between Malaysia and China stood at a massive RM487.13 billion, or 17.1 per cent of Malaysia’s total global trade.

Mr Saktiandi said the latest Malaysian export numbers resulted in a year-to-date export contraction of 2.6 per cent in the first four months of 2023, and pose downside risks for the full-year export outlook. That, too, will weigh against the ringgit, he added.

Last November, Mr Saktiandi said the ringgit was expected to reach a low of 3.35 to 3.45 against the Singdollar if ringgit volatility increases and the Singapore dollar remains resilient.

The exchange rate is likely to be welcome news to Malaysians working in Singapore, and is expected to keep the demand for the ringgit strong. It could also add to the brain drain problem facing Malaysia, with more Malaysians taking up jobs in Singapore.