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Money changers in Singapore run low on ringgit as currency hits all-time low against SGD

SINGAPORE — The Malaysian ringgit fell to an all-time low against the Singapore dollar on Friday (Nov 25), with S$1 trading at RM3.1317 at around 2.10pm, sparking a rush by bargain hunters seeking to stock up on the plunging currency.

By 6pm on Friday (Nov 25), more than half of the money changers at The Arcade at Raffles Place had run out of ringgit. Photo: Koh Mui Fong/TODAY

By 6pm on Friday (Nov 25), more than half of the money changers at The Arcade at Raffles Place had run out of ringgit. Photo: Koh Mui Fong/TODAY

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SINGAPORE — The Malaysian ringgit fell to an all-time low against the Singapore dollar on Friday (Nov 25), with S$1 trading at RM3.1317 at around 2.10pm, sparking a rush by bargain hunters seeking to stock up on the plunging currency.

By late trade, the ringgit had clawed back a little to S$1 to RM3.1280. The previous low was on Sept 29 last year, when S$1 could buy RM3.1309.

Emerging-market currencies have been hit hard by the spectre of higher United States interest rates and the prospect of trade protectionism under American President-elect Donald Trump. The ringgit has been Asia’s worst-performing currency since Mr Trump’s victory, falling more than 6 per cent against the greenback over the past two-and-a-half weeks. During this time, the ringgit has fallen 3.5 per cent against the Singapore dollar.

The decline in the ringgit has been exacerbated by Malaysia’s relatively inadequate level of foreign currency reserves, compared with other Association of South-east Asian Nations economies, said Mr Woon Tian Yong, investment analyst at Phillip Futures.

“(This) raises doubts on the economy’s ability to deal with sudden and large fluctuations against the ringgit, leading to outflows from the currency. Another reason is Bank Negara Malaysia’s recent attempt to curb ringgit speculation by getting banks to stop non-deliverable forward transactions. This may have had an unintended effect of triggering fears of capital controls, leading to pre-emptive outflows from the currency as well,” he added.

The lower ringgit saw consumers rush to money changers on Friday to snap up the currency, leaving shopkeepers in a bind. By 6pm, more than half of the money changers at The Arcade at Raffles Place had run out of ringgit. Queues snaked to the outlets that still had stock, waiting to exchange their Singapore dollars at the going rate of S$1 to RM3.09.

China Money Exchange boss Mohamed Hasan Shaik Ismail, 45, said he had sold all his ringgit by 2.30pm. “It’s the school holidays now, so a lot of people want ringgit, but the rate is going down and down, and some customers also wait and see,” he said.

Some of the customers waiting in line to buy the ringgit told TODAY that they expected the currency to drop even further. “Monday, maybe can even get RM3.10 for a dollar. I heard next year a RM3.50 rate might even come,” said Mr Alex Yee, 46, a senior executive in a shipping company.

Bank employee Mr Nathan Xu, 29, who was exchanging a small amount for a weekend Johor Baru trip, said: “It can always go lower. Normally I would like to see some kind of stablisation first before I consider cashing in. Now it seems like a free-fall.”

Foreign exchange advisor, Mr Joseph Goh, 29, who was exchanging S$150, said he feels “happier” when the rate is in his favour, but is not thinking of making serious investments as “it would go lower”.

Some money changers at The Arcade, however, expressed concerns about the volatility’s effect on their businesses. Mr Deen, the manager at Extract Money Changer, said a low ringgit is “very bad news” and there would be “no way” he would be stocking up on the ringgit in this trading climate.

“(Customers) are cashing in. We are losing out (because) our cost would be higher,” said the 40-year-old. His firm lost almost S$5,000 on Friday trading RM3 million, he said.

Similarly, a manager from Al-Amin Trading said: “The demand is high, but the losses are high too ... We are not thinking of trading ringgit in high volumes.”

However, at Arcade Money Changer, there are no signs of a pause. Manager Mohamed Rafik, 45, said he is trying to do “business as usual”.

Commenting on the cautious stance some traders are taking, he said: “Maybe they panicked and sold way below cost. They are worried it might go lower, so they clear stock and try to finish what’s on hand to avoid tomorrow’s losses.”

Analysts TODAY spoke to said that the ringgit could recover slightly after the Federal Reserve moves to raise US interest rates next month.

“A year ago, ahead of the first Fed hike in close to a decade, the ringgit was badly hit compared against the US dollar, depleting the country’s foreign reserves … As with the last Fed hike, we could still see some reversal following the highly anticipated Fed action in December. This could move the Singapore dollar/ringgit back towards 3.000,” said Ms Pan Jingyi, market strategist at IG.

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