KUALA LUMPUR (July 28): The ringgit depreciated to its weakest level against the Singapore dollar at 3.2255 on Thursday (July 28) morning.
The local note pared losses to close the day at 3.2233.
The ringgit and Singapore dollar were however both seen strengthening against the US dollar compared to the past two days, after the US Federal Reserve (Fed) lifted its policy rate by 75 basis points (bps) overnight.
The ringgit traded between 4.4485 to 4.4563 against the greenback to close at 4.4532 on Thursday. The US dollar is experiencing a correction after it had strengthened to close at 4.4577 and 4.4580 in the previous two days.
The Fed has raised its policy rate by 225bps overall this year to a range of 2.25% to 2.5%, and there are expectations that it will announce further increases in the following meetings in September, November and December.
The Monetary Authority of Singapore (MAS) tightened monetary policy for its fourth time on July 14 after the country flattened its nominal effective exchange rate slope to 0% on March 30, 2020, in light of the Covid-19 pandemic.
MAS then raised the slope slightly on Oct 14, 2021, and again on Jan 25 and April 14. Most economists believe that Singapore will further tighten its monetary policy stance in October, to slow inflation.
Bank Negara Malaysia, meanwhile, had raised the overnight policy rate (OPR) by 25bps on May 11 and by another 25bps on July 6 to 2.25%, with economists not ruling out another hike in September.