Friday 29 Mar 2024
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KUALA LUMPUR (May 24): The ringgit depreciated to its weakest level against the Singapore dollar (SGD) on Tuesday (May 24), after the exchange rate surpassed 3.1993.

As of 5.45pm, the local note had weakened to 3.1939 against the Singapore dollar. The exchange rate so far in the day was between 3.1922 and 3.1993.

Over the past one year, the ringgit was trading between 3.0330 and 3.1993 against the Singapore dollar.

Maybank Investment Bank opined that the Singapore dollar — Malaysian ringgit pairing will maintain its bid tone despite the Singapore dollar coming on strong. 

“SGDMYR maintained its bid tone amid SGD strength. Cross was last at 3.1940 levels. Daily momentum on the daily chart intact, while relative strength index (RSI) rose,” it said on a note on Tuesday. 

Maybank forecasted the resistance level of the Singapore dollar at 3.20 and the support level at 3.16 (based on a 21-daily moving average). 

If the support level is breached, Maybank sets the following support levels at 3.1510 and 3.1340.

The Singapore dollar has been rising against the Malaysian ringgit since late April due to differing monetary policies by the Singapore and Malaysia central banks.

Singapore has pursued a more aggressive monetary policy by appreciating the Singapore dollar at a faster pace and at a higher level. 

The Monetary Authority of Singapore (MAS) had raised the slope of the Singapore dollar nominal effective exchange rate (NEER) policy band from 0% in October 2021, later raising again in January and April 2022. 

On the other hand, Bank Negara Malaysia (BNM) has kept its interest rate stable at record low of 1.75% since July 2020, until a surprise increase of 25 bps of the Overnight Policy Rate (OPR) to 2% on May 11 this year. 

The policy divergence is currently favouring the Singapore dollar. However, there are possibilities of BNM raising the OPR in future to contain both inflationary pressures and the stability of the local currency.

Edited ByKamarul Azhar
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