On Feb 21, Malaysia's MYR reached a new low with Singapore's SGD: S$1 = RM3.57.
It was the lowest the ringgit has ever been, breaking records again and again. But, what are the reasons?
1. The ringgit is weak against the U.S dollar (about 2% from its lowest--1998 Asian financial crisis) making it weak against SGD
2. It is not because of a direct economic issue with Singapore
3. Influenced by external factors like market adjustments, changing US interest rate expectations, geopolitical concerns, and uncertainty surrounding China's economic prospects
4. Falling demand for exports -- 10 consecutive months, hurting economic growth
5. China experiencing their own economic issues
6. Limitation on Malaysian government policy
7. Malaysia's political instability -- lack of policy clarity
8. New PM's failure to introduce promised reforms, such as subsidy reductions
9. Increased cost of dollar-denominated debt
10. No interest rates cuts from the Federal Reserve as of yet
Malaysian economists expect the situation to improve in the later half of 2024, the Malaysian government describes the situation faced by Malaysia now as "temporary" and Bloomberg even predicts a 9% improvement by the end of the year.
Is that the truth? Only time will tell.
