“It’s really going crazy,” Lee said of the exchange rate. “It’s like a bonus – during Chinese New Year we buy soft drinks, beer and invite friends over, and this really helps. You can buy more.”
Lee is one of many residents of Singapore who are taking advantage of the local dollar’s unprecedented strength when they cross the border into Malaysia, as the cost of living soars back home.
The Singapore dollar has risen to a record 3.55 ringgit after five successive rounds of policy tightening until October 2022, and the central bank’s efforts to dampen inflation may pave the way for more currency strength.
The ringgit, on the other hand, has been buffeted by weaker exports and Malaysia’s wide interest rate gap with the US. Years of equity capital outflows and political tumult have further dented sentiment on emerging Asia’s worst-performing currency.
“It is a simple gauge of relative living standards,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd. “Based on the historical trend in the Singapore dollar-ringgit exchange rate so far, the question is when we could reach 4.”
Against the US dollar, the Malaysian currency has fallen about 3.5 per cent this year, adding to losses from the previous three years.
The ringgit isn’t the only currency at a record low against Singapore’s dollar. Bolstered by investors’ confidence in the economy, the currency also strengthened to an all-time high against the Philippine peso and Indonesian rupiah last month.
Many consumers in Singapore are acutely aware of this dynamic heading into the Lunar New Year holiday. Local websites provide detailed cost comparisons for traditional snacks such as pineapple tarts and bak kwa – a barbecue pork delicacy – in Singapore dollars and ringgit to showcase how much cheaper things are across the border.
Among those cashing in on a stronger Singapore currency is property agent Sylvester Ee. The associate group director at Propnex Realty Pte. recently visited KSL City Mall in Johor Bahru, a stone’s throw away from the border, to load up on festive goodies.
“I have quite a lot of clients that I wanted to buy Chinese New Year goodies for to show my appreciation to them,” said Ee, who bought 20 boxes of snacks including pineapple tarts and “love letter” rolls.
“I think I paid about S$10 per box – in Singapore it’ll easily be two times the price.”