SINGAPORE: The Singapore dollar continued its ascent against the Malaysian currency to reach a 13-month high against the ringgit on Wednesday (Dec 19).
The Singapore dollar rose to an intraday high of RM3.0650 on Wednesday before easing back to RM3.0546, in what some dealers attributed to reduced demand for the Malaysian currency amid weaker oil prices.
This is the highest since the Singapore dollar touched RM3.0724 on Nov 20 last year.
Oil prices are under pressure as traders fret over a global supply glut, higher production and the outlook for demand.
“Doubts over the impact of planned production cuts led by the Organization of the Petroleum Exporting Countries (OPEC) are also pressuring prices,” one dealer told Bernama.
Global benchmark Brent crude futures ranged between US$56.27 and US$56.85 per barrel on Wednesday. Prices had dropped 5.6 per cent on Tuesday, at one point hitting a 14-month low.
Malaysia's Deputy Finance Minister Amiruddin Hamzah said on Wednesday that the Malaysian central bank would always make sure that the ringgit is stable, by using proactive measures to ensure sufficient liquidity and a resilient market.
"In the long term, the ringgit value would be driven particularly by the strength of the country’s economic fundamentals. Hence, Malaysia needs to focus efforts on increasing its economic resilience by diversifying revenue sources and strengthen its fiscal position,” he said.
On how far the government is monitoring the ringgit value following a possible move by the US to increase its interest rate soon, Amiruddin said the central bank’s current policy had and will continue to help Malaysia in times of uncertainty and volatility, without affecting the country’s economy.
"This policy including a flexible ringgit exchange rate will play an important role as an external shock absorber without affecting the domestic economic activities.
"Secondly, by ensuring the financial markets function in an orderly manner by taking proactive measures to make sure liquidity are sufficient, reduce speculation to avoid significant volatility in the ringgit, and lastly, using international reserves in accordance to the needs to stabilise the market,” he explained.