With a spate of recent news, signifying that the Singapore dollar has hit historical highs against the Malaysian ringgit and Indonesian rupiah. So what does that mean for us at Empire Global? Travel!!
It’s the perfect time to hit the money exchangers and get stocked on Malaysian ringgit. It’s the year end and holidays too. Hence there is probably no greater time than to take advantage of the situation plus take a break with the family.
Singapore Dollar Strengths?
Firstly, the Singapore dollar has gained great ground on the yen due to monetary easing by the Bank of Japan.
Since the start of the year 2014, the Singapore Dollar has risen 7.3% on the ringgit with the money market currently standing at SGD 1 to RM 2.64 (time of writing). This has been extremely great news for those Malaysians working in Singapore as they enjoy the benefits of the exchange rates. Some analysts expect it to fall even further. We hope so too!
In-depth of Oil Demands
Part of the ringgit downward trend has been affected by the continuous slide in oil prices. As Malaysia has been a strong oil-exporting country, there are fears that falling oil prices will further cause declining revenues for the country. The oil price has fallen by more than 40% since June, when it was $115 a barrel. It is now below $70. This comes after nearly five years of stability.
Weak economic demand has caused oil demand to slide tremendously. Hence a great oil-exporting country like Malaysia has seen it’s export market falling. Oil-related industries account for a third of Malaysian state revenue.
How Does the Singapore Dollar Work?
The Singapore dollar is managed by the MAS against a currency basket comprised by the country’s major trading partners and competitors. The central bank established the weight of every different currency by taking into account the trade flows between the countries and the way the corresponding economy is impacting Singapore’s exposure to the rest of the world.
Being a massively export dependent economy and a crucial financial and logistics centre, the way monetary policy is conducted has proven to be an essential tool for the booming economy since 1981.
What Next for you?
You probably have already seen moneychangers having long queues for the holidays. Now with the weaker Ringgit there are even longer queues and higher Singapore Dollar exchange needed to get the better exchange rates.
Today, moneychangers said they were still seeing long queues of people buying the Malaysian currency at their shops. However, they were not expecting a shortage in the coming days. Mohamad Rafik of Arcade Money Changers said: “Most people already bought as much ringgit as they can. I don’t think they will buy more.”
The falling value of the ringgit over the past weeks has been good news to Malaysians working in Singapore and Singaporeans who regularly travel across the Causeway for business or leisure.
Singaporeans travelling to these locations (Malaysia, Indonesia, Thailand, Australia) are going to enjoy great conversion rates and get more for their money.
Although while the Singapore Dollar is good in the asian markets, it has suffered against the Euro & the USD. Holiday makers rejoice as you can now make your dollar stretch event further especially in Malaysia or any oil-exporting country!
Word of Caution for Singapore Dollar
As with all currency exchanges, do not overplay into the whole forex exchange. Exchange what you need or exchange just a little more for future needs. Currencies can change rapidly when the time comes and its seldom wise to hedge so much into currencies.
However, you might want to consider taking public transport. With VEP charges raised more than 5 times from RM2.90 to RM16.50 and with recent news that the Malaysian authorities plans to increase it to RM20 in middle of 2015 the savings from the falling ringgit might not be seen.
Meanwhile, enjoy the exchange rate!