“SGDMYR hit a record high of 3.1964, largely due to strength in the Singapore dollar, as preferred by MAS officials,” says Mr. Simon Harvey, head of FX analysis at MonFX.
The Singapore dollar (SGD) reportedly continued its rise against the Malaysian currency on May 23, reaching an all-time high against the ringgit (MYR).
Mr. Simon Harvey, head of FX analysis at MonFX, told CNA that the Singapore dollar reached a record high of RM 3.1964 on Monday, largely because of strength in the Singapore dollar, before easing to RM 3.1950 later in the day.
According to Mr. Harvey, there wasn’t one individual headline-catching event, but instead the technicalities of Singapore’s monetary policy that created this all-time high.
“With the yuan holding the largest share in Singapore’s S$NEER basket, the rally in CNY dragged SGD higher too as currency traders looked to offset the depreciation in the Sing dollar relative to CNY with other currencies,” Mr Harvey said.
CNA reported that the Singapore dollar has been rising against the Malaysian ringgit since late April.
Money changers saw a surge of people lining up to buy ringgit in the week of April 25, after the exchange rate increased to 3.17, up from 3.10 levels in early April.
Based on the report, Singapore has pursued a more aggressive monetary policy by appreciating the Singapore dollar at a faster pace and at a higher level.
The authorities first tightened its policy last October 2021 when it raised the slope of its exchange-rate-based policy band in order to allow the Singapore dollar to appreciate at a slightly faster pace.
It then followed up with another steepening of the slope in January this year, surprising markets with an inter-meeting adjustment.
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The Singapore central bank said in its half-yearly policy statement in April that it would raise the slope of appreciation “slightly” yet again while re-centering the mid-point of the policy band “at the prevailing level”.
Saktiandi Supaat, head of FX Research at Maybank in Singapore, said that the Singapore dollar has been stronger on the appreciation front due to the policy moves.
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