8-2-2024 (SINGAPORE) Carman Lee has returned to her hometown in northwestern Malaysia, Ipoh, after a lengthy seven-and-a-half-hour bus journey from Singapore, just in time for the upcoming Lunar New Year festivities. As a Westin Singapore employee, Lee has an additional reason to rejoice this holiday season: the Singapore dollar is at an all-time high against the Malaysian ringgit, making everything significantly cheaper.
“It’s really going crazy,” remarked Lee about the exchange rate. “It’s like a bonus — during Chinese New Year, we buy soft drinks, beer, and invite friends over, and this really helps. You can buy more.”
Lee is among numerous Singapore residents who are capitalising on the unprecedented strength of the local dollar when they venture across the border into Malaysia, particularly as the cost of living escalates back home. The Singapore dollar has surged to a record 3.55 ringgit following five consecutive rounds of policy tightening until October 2022. The central bank’s efforts to curb inflation may further bolster currency strength.
Conversely, the ringgit has faced challenges due to weakened exports and Malaysia’s substantial interest rate differential with the United States. Years of equity capital outflows and political instability have exacerbated concerns surrounding Asia’s weakest-performing currency.
“It is a simple gauge of relative living standards,” noted Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd. “Based on the historical trend in the Singapore dollar-ringgit exchange rate so far, the question is when we could reach 4.”
Against the US dollar, the Malaysian currency has depreciated by approximately 3.5% this year, compounding losses from the preceding three years.
‘Two times the price’
The ringgit is not the sole currency at a historic low against the Singapore dollar. Bolstered by investor confidence in the economy, the currency has also soared to a record high against the Philippine peso and Indonesian rupiah in recent months.
Many consumers in Singapore are acutely aware of this dynamic as the Lunar New Year holiday approaches. Local websites furnish comprehensive cost comparisons for traditional snacks like pineapple tarts and bak kwa (barbecue pork delicacy) in both Singapore dollars and ringgit, highlighting the substantial savings across the border.
Among those taking advantage of the robust Singapore currency is real estate agent Sylvester Ee, an associate group director at Propnex Realty Pte. Ee recently visited KSL City Mall in Johor Bahru, a short distance from the border, to stock up on festive treats.
“I have quite a lot of clients that I wanted to buy Chinese New Year goodies for to show my appreciation to them,” revealed Ee, who purchased 20 boxes of snacks including pineapple tarts and “love letter” rolls. “I think I paid about 10 Singapore dollars per box — in Singapore, it’ll easily be two times the price.”
