RINGGIT GAINS AGAINST SINGAPORE DOLLAR UNLIKELY TO HIT TRADE

By Nur Fadhliana Shaari

JOHOR BAHRU, Jan 11 (Bernama) -- The ringgit’s recent strengthening to around 3.16 against the Singapore dollar was expected and has had little impact on cross-border trade between Malaysia and Singapore, an academic said.

Universiti Teknologi Malaysia senior lecturer Professor Dr Nanthakumar Loganathan said the move was consistent with the ringgit’s broader gains against the US dollar since the third quarter of 2025.

The impact on bilateral trade has been limited, he said, as the Singapore dollar remains substantially stronger than the ringgit.

“The rise of the ringgit against the Singapore dollar will not have a major effect, as foreign direct investment from Singapore — one of Malaysia’s largest trading partners — continues to show an upward trend,” he told Bernama.

He cited several large-scale investments in Johor, particularly within the Johor–Singapore Special Economic Zone (JS-SEZ), as clear signs of Singaporean investors’ confidence in Malaysia’s economic prospects.

Nanthakumar said the ringgit’s strength could be temporary, given the potential influence of global economic uncertainty on currency movements in the near term.

Asked whether the ringgit’s performance reflected Malaysia’s economic fundamentals, he said the positive trend was supported by stronger domestic conditions and prudent fiscal policies, especially in taxation and spending management to contain inflation and unemployment.

He added that Bank Negara Malaysia’s monetary policy, including its management of the overnight policy rate amid global financial market volatility, remained crucial to economic sustainability.

A firmer ringgit, he said, could bolster confidence among traders and foreign investors by signalling exchange rate stability and a more resilient economic trajectory.

It could also encourage higher foreign direct investment inflows, particularly into government-priority strategic sectors, with the JS-SEZ expected to be among the main beneficiaries.

However, he cautioned that exports could face mild pressure if the ringgit continues to strengthen, as Malaysian goods would become more expensive in international markets compared with regional peers with weaker currencies.

“Malaysia is no longer fully dependent on goods exports. The services sector remains the largest contributor to gross domestic product, notably tourism, banking, transport and related subsectors,” he said.

On trade strategy with Singapore, he said bilateral trade was expected to remain robust, as Malaysian products remained competitive and relatively affordable in the republic.

Separately, Johor Bumiputera Entrepreneurs Council member Samsudin Ismail said the stronger ringgit must be underpinned by solid and sustainable economic fundamentals for its benefits to be felt by the public, particularly in addressing rising living costs.

He said the appreciation would be meaningful only if it proved consistent, rather than temporary and driven solely by external factors.

“If it is temporary, we need to assess other fundamentals, as currency appreciation alone does not necessarily lift the economy to its potential,” he said.

From a market perspective, he added, a stronger ringgit typically reflected improved investor confidence, expectations of more stable economic growth and a perception that fiscal and monetary policies were on a firmer footing.

Samsudin said currency volatility also played a role in business strategy, particularly for Bumiputera entrepreneurs involved in cross-border trade.

The ringgit’s strength would deliver tangible benefits, he said, only if supported by economic growth, higher investment, job creation and productivity gains, with clear spillovers in easing living costs.

-- BERNAMA