Singdollar hits 10-month high against MYR; analysts still bullish on ringgit

On September 9, 2025, the Singapore dollar hit a 10-month high against the Malaysian ringgit, reaching RM3.2217, according to data from Google Finance. The rise in the Singdollar can be attributed to rising US Treasury yields and risk-off sentiment, which led investors to seek the city-state's currency as a regional safe haven.

The divergence in exchange rates between the two currencies highlights the differing near-term drivers for Singapore and Malaysia. Singapore's exchange-rate framework, managed by the Monetary Authority of Singapore (MAS), has been buffering the Singdollar against global market stress. Meanwhile, the Ringgit is facing pressure from foreign capital outflows, despite Malaysia's stable economic growth.

Maybank's head of FX research and strategy, Saktiandi Supaat, attributes the Singdollar's strength to the MAS's exchange-rate framework, which manages the currency against a basket of its major trading partners. Additionally, strength in major currencies, such as the yen, and positive sentiment towards Singapore equities have provided further support.

JP Morgan's Asia head of rates and FX strategy, Yuxuan Tang, is cautious about most Asean currencies due to capital outflows and external vulnerabilities. However, she believes the MAS's tightening bias, prospects for continued capital inflows, and the managed nature of the exchange-rate regime will allow the Singdollar to remain resilient and potentially strengthen further.

In contrast, the Ringgit is experiencing a broader sell-off in regional foreign exchange markets. Factors contributing to this weakness include firming US yields, rising oil prices, and weakness in Malaysian government securities. This has led to capital outflows from Malaysian equities, with global funds pulling US$122 million from Malaysian stocks in the first week of September.

Despite the current sell-off, currency strategists view the Ringgit's slide as temporary, attributing it to a near-term market adjustment rather than a fundamental crack in Malaysia. The country's economic growth, investment pipeline, and external sector are holding up. Malaysia's economic boom has also prompted Bank Negara Malaysia to extend its interest rate pause for a seventh consecutive meeting, holding its overnight policy rate at 2.75%.

However, the US Federal Reserve's rate cuts and the impact of the Middle East conflict on crude prices could lead to further Ringgit weakness against the Singdollar. Maybank continues to favor the Malaysian currency in the long run, but near-term pressure could persist if global yields remain elevated.