By Marissa Yeo AND Angela Teng
SINGAPORE — The Malaysian ringgit yesterday sank to an all-time low, breaching the 3.00 to the Singapore dollar level to trade as low as 3.0114 ringgit to one Singapore dollar.
Hit by the deepening commodity price slump as worries about China’s economy dented global risk appetite, the currency also slumped to a 17-year low of 4.2615 against the United States dollar.
The free-fall led to a surge in demand for the ringgit here, with many people flocking to money changers, several of whom told TODAY they had either run out of the currency or were low on stock. Long queues were seen at money changers in the Central Business District, who were offering rates of up to 2.96.
One of those lining up was Mr Azlan Aziz, 44, an IT engineer, who goes to Malaysia once a month. He said: “Initially, I planned to change S$200, but knowing that the rate is close to 3.00, I decided to change S$500.” Another customer, who gave her name as Ms Chong, said she had changed S$1,000 and would put the money aside for her next trip across the Causeway.
Mr Ajmal Hussain, who works at Mohamed Thahir Exchange, said: “In the morning, we placed the rate at 2.96, and there was a short burst of crowds during that (time). At this rate, our stock will run out very fast.”
The ringgit has weakened 18 per cent this year, making it Asia’s worst performer, as a slide in crude prices coincides with a political scandal involving Prime Minister Najib Razak. Global funds have dumped more than US$3 billion of Malaysian equities this year, the biggest outflow since 2008, and also cut debt holdings last month.
The slump has been made worse by Malaysia saying last Friday that its foreign exchange reserves continued to decline, leaving the central bank with less ammunition to defend the ringgit.
Mr Philip Wee, DBS senior currency strategist, said: “The level now is like catching a falling knife … It is hard to predict a resistance level right now, as the major psychological point of 3.00 was difficult to break.”
He added that the ringgit could fall to as low as 3.10 to 3.15 against the Singapore dollar, in the “extreme case” of a market panic.
Economists noted that businesses and consumers in Singapore would benefit from the falling ringgit. UOB economist Francis Tan said: “Wholesalers will have higher purchasing power. For example, when they import vegetables from Malaysia, the prices will be cheaper. In order to be competitive, sellers will not mind pricing goods lower, and the cost savings will be passed on to consumers.”
Ms Selena Ling, head of treasury research and strategy at OCBC Bank, added: “The man in the street will benefit from cheaper goods … We are already seeing long queues at money changers.”
On whether the prices of food products imported from Malaysia would fall, Ms Ling said it depends on how long the ringgit stays weak relative to the Singapore dollar. “Whether the ringgit falls further … depends on various broad indicators, such as the political situation in Malaysia and the expected interest rate hike from the US Federal Reserve,” she said.