Singdollar hits 15-year peak against ringgit

SINGAPORE - Singapore shoppers in Malaysia will be in the money after the Singapore dollar hit a 15-year high against the ringgit on Monday.

Malaysian workers employed here will also benefit after the exchange rate hit RM2.5479 to the Singdollar. This is the strongest the Singdollar has been against the ringgit, since early 1998 and the turmoil of the Asian financial crisis.

In late May, a Singdollar would have bought only RM2.3945, so it has risen 6 per cent since then.

The rise is being driven by perceptions that the Singdollar is a relative safe haven currency compared with others in the region.

Singapore government bonds have AAA ratings from Fitch and Standard & Poor's, with stable outlooks from both ratings agencies. Moody's has placed Singapore at Aaa, also with a stable outlook.

The prospect of slower growth in China has also dimmed the outlook for Malaysian exports, reported Bloomberg. China is Malaysia's second-biggest export market but shipments have been falling.

Malaysia also looks relatively vulnerable given the huge amounts of money that have been flowing into its asset markets, according to a recent Citi report.

With the anticipated tapering of the United States Federal Reserve bond-buying programme, some dealers reckon US investors are beginning to pull money out of emerging markets like Malaysia.

The weaker ringgit can also benefit Muslim Singaporean families visiting Malaysian shops and bazaars ahead of Hari Raya Aidilfitri next week. The New Paper reported that Johor Baru's Plaza Angsana was teeming with Singapore cars on the weekend amid the festive Ramadan bazaars. Families were spotted pushing trolleys full of groceries back to their cars.

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