MALAYSIA — The ringgit reached its lowest level in history against the Singapore dollar (S$) as it dropped to a daily low of 3.4783 on Wednesday (12 Jul).
This level surpassed the previous daily low of 3.4717 recorded on 22 June.
Last week, the Monetary Authority of Singapore (MAS), the central bank of Singapore, warned of weak near-term growth for one of Asia’s top financial hubs and said its fight against rising prices was not yet over, despite lowering its inflation forecast for this year.
Ravi Menon, the Managing Director of the MAS, stated that Singapore’s inflation would significantly decrease due to tight monetary policy, but the central bank will not shift switching from “inflation-fighting mode” to “growth-supporting mode”.
In April 2023, when Singapore’s main consumer price statistics exceeded expectations, the MAS took steps to strengthen its currency.
This followed the MAS’s use of foreign exchange rates as a primary tool to address import inflation issues.
Ringgit dropped to a seven-year low against the British pound
Meanwhile, in another development, the value of the ringgit also dropped to a seven-year low against the British pound sterling as it fell to 6.0263 on Wednesday.
The ringgit had breached the RM6 to £1 mark earlier on Tuesday (11 Jul).
The last time the ringgit dipped to RM6 against the pound was on May 31, 2016, when the exchange rate stood at 6.0299.
The ringgit is not alone as the pound has strengthened against other regional currencies and the US dollar this year.
This is also a result of the country’s tight monetary policy to curb inflation.
In June, the Bank of England unexpectedly raised its interest rates by 50 basis points.
Ringgit appreciated against the US dollar
However, according to The Edge, the ringgit strengthened against the US dollar on Wednesday, trading at around 4.6470, up from 4.657 on Tuesday.
Stephen Innes, the Managing Director of SPI Asset Management, quoted by Bernama, stated that the continued prospects for credit to property developers would see China’s efforts to accelerate construction projects to boost sales and increase demand for commodities.
Chinese authorities have also announced measures to support the real estate sector by allowing one-year extensions on loans for “troubled” property developers.
“This is positive for ringgit trading today (Wednesday). Nevertheless, markets expect a decline in US inflation on Wednesday, but of course, the question is how much it will beat the consensus,” he told Bernama.
He explained that low US inflation data would cause the US dollar to decline, leading local exporters to sell the US dollar for the ringgit, especially when there are indications of a stable yuan.