Singapore dollar hits 8-month high against Malaysian ringgit

Singapore dollar hits 8-month high against Malaysian ringgit

Malaysia ringgit
(Photo: AFP)

SINGAPORE: The Singapore dollar rose to an eight-month high against the Malaysian ringgit on Wednesday (Sep 5), as a tumult in global emerging markets showed few signs of abating.

The Singapore dollar rose to an intraday high of RM3.0183 before easing back to RM3.0161. This is the highest since the Singapore dollar touched RM3.0210 on Jan 5.

The ringgit also fell lower against the US dollar at 4.1460 as traders shifted to safe-haven currencies on risk aversion in the foreign exchange market.

Bank Islam Malaysia chief economist Dr Mohd Afzanizam Abdul Rashid said the weakening ringgit performance is primarily caused by external anomalies rather than domestic factors.

“We have seen South Africa falling into recession, Argentina’s central bank raising its policy rate to 60 per cent last week and the ongoing trade tension instigated by the US.

“All this has adversely affected market confidence and naturally, flight to quality happens,” he told Bernama.

Dr Mohd Afzanizam said this would mean demand for safe-haven currencies such as the US dollar and yen would rise.

By extension, he said the attractiveness of safe-haven currencies would weaken the emerging country currencies, including the ringgit.

Meanwhile, Putra Business School senior lecturer and manager for Business Development Dr Ahmed Razman Abdul Latiff said one possible reason why the ringgit has been declining against US dollar was slower Malaysian export growth to the US this year.

“The slower growth is due to tariff hikes imposed by the US since early this year and it is possible for the ringgit to go down further to RM4.20 per dollar by year-end,” he said.

Meanwhile, Bank Negara Malaysia has maintained the Overnight Policy Rate at 3.25 per cent after a two-day Monetary Policy Committee (MPC) meeting.

“The focus today was the MPC meeting and as expected Governor Datuk Nor Shamsiah Mohd Yunus did not rock the boat,” said Oanda’s head of trading Asia-Pacific Stephen Innes.

“Traders are placing long dollar hedges and wait calmly for better days with the ringgit tracking towards RM4.15 per dollar,” he added.

Source: Bernama/CNA/aj

Bookmark