They said customers are also exchanging their Singapore dollars for Malaysian ringgit in larger amounts.
Mr Danny Yoong, second vice president at Money Changers Association, Singapore, said: "You can see people are starting to change more (money) - some of them will keep for future use. Now the Singapore dollar is strong, so for those who always go to Malaysia to buy groceries and for the December holidays, they worry that the price will go up."
In late Asian trade on Friday (May 22), the ringgit was quoted at about 2.69. The Singapore dollar has been holding its own against the Malaysian unit and other regional currencies in recent months. Analysts said one reason is the decision by Singapore's central bank in April to maintain its policy of allowing a modest appreciation of the Singapore dollar against a basket of currencies. There are also external factors, such as the outlook for US interest rates and oil prices.
"In the last few months, a lot of it has got to do with expectations of US rates normalisation,” said Mr Jimmy Koh, Head of Research and Investor Relations at UOB. “The other thing that drives the Sing-ringgit exchange rate, are the economic differentials between the two countries.
"One of the main things is the collapse in oil prices. If you look at the whole of Asia, I think, one thing that is being flagged out is Malaysia's dependence on oil; 30 per cent of the fiscal revenue comes from oil-related revenue. I think that has been one of the factors that has depressed the ringgit versus the Singapore dollar."
Market watchers have also predicted that as US policymakers normalise rates in the long term, both currencies could lose ground against the greenback. But the Malaysian ringgit is likely to weaken more, relative to the Singapore dollar . - Channel News Asia
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