Singaporeans face costlier shopping in Malaysia

The ringgit has appreciated mainly because more money is expected to flow into Malaysia as US interest rates come down and as Malaysia’s economy picks up with new government reforms and stronger growth, explained Maybank head of foreign exchange research Saktiandi Supaat.

More capital is leaving the United States after the US Federal Reserve cut its policy rate twice this year, and this is finding its way into other markets like Malaysia, resulting in the strengthening of the ringgit versus the US dollar and other currencies.

Meanwhile, Malaysian Prime Minister Datuk Seri Anwar Ibrahim’s administration introduced investment-friendly policies this year that make it easier for foreign businesses to invest in sectors such as semiconductors, electric vehicles and digital technology, by cutting red tape and strengthening investor protections.

Malaysia’s foreign direct investment inflow jumped to RM8.5bil in the third quarter of this year, up sharply from RM1.6bil in the second quarter, according to official data. The rebound was reportedly led by the services sector, especially information and communications, with major investments coming from Singapore, among other countries.

Johor was among the states that received the highest amount of foreign capital, fuelled by initiatives such as the Johor-Singapore Special Economic Zone, which drew investments from data centre operators and advanced manufacturers, the Malaysian Investment Development Authority said.

In addition, data released last week showed the economy growing 5.2% in the third quarter, up from 4.4% in the second, as consumption and exports continued to strengthen.

A currency tends to strengthen when the domestic economy is strong because investors around the world see that country as more attractive, stable and profitable. — The Straits Times/ANN