Malaysia’s ringgit fell to a 10-month low versus the Singapore dollar, weighed by foreign stock outflows while the island state’s currency is supported by a hawkish monetary policy stance.
The ringgit falls 0.2% against the Singapore dollar to 3.2162 on Wednesday, the lowest since November, as stock outflows continued for the second straight month. Singapore’s currency remained buoyed by the central bank’s monetary policy tightening stance.
"Expectation of further tightening of the Singapore dollar nominal effective exchange rate policy at the October meeting is supportive for the Singapore dollar, while the safe-haven status is back into play on renewed geopolitical uncertainties,” according to Wee Khoon Chong, senior market strategist for Asia Pacific at BNY in Hong Kong. The moves reflect the "relative advantage of the Singapore dollar over an equally supportive ringgit,” he added.
Global funds have sold $122 million of domestic stocks so far this month, following a $486 million outflow in August. Fiscal concerns have added to investor caution, with traders watching for the impact of subsidies on the nation’s fiscal position after Prime Minister Anwar Ibrahim restored subsidized fuel quotas despite elevated energy prices. Anwar is scheduled to unveil the 2027 budget on Oct. 9.
Still, the ringgit may find support from Malaysia’s strong economic growth, helped by the artificial intelligence boom, which prompted Bank Negara Malaysia to signal a hawkish pivot last week.
Meanwhile, robust economic outlook and policy tightening from the Monetary Authority of Singapore are providing tailwinds for the local currency. The central bank in July tightened monetary policy in a second straight review, increasing the rate of appreciation of the local dollar against the trade-weighted currency basket. The Singapore dollar’s tight inverse link with the greenback is also giving it a boost.
The Singapore dollar-ringgit pair carries particular significance given the countries’ close trade ties and one of the world’s busiest land borders. - Bloomberg
