Articles
Published on
November 22, 2023

MYR Economic Insights: A Trade Statistics Special

5
min read

On May 24, the Singapore dollar hit its all-time high against the Malaysian ringgit as it surged to 3.4102 according to Bloomberg data. Five months on, the record was broken yet again on Oct 20, when the Republic’s dollar climbed to 3.4826 against the ringgit.

Now the worst performer in Asia after the Japanese yen, former Malaysian premier Mahathir Mohamad has aired his thoughts on “pegging its sinking currency to the dollar” as the ringgit continues to hit critical lows, a repeat of the policy he executed when the Asian Financial Crisis hit in the late 1990s.

In our recent LinkedIn poll, we set out to gauge public sentiment on the future of the Malaysian ringgit (MYR). At the close of the poll, 62% of respondents indicated that they expect the MYR to continue its slide, 24% of respondents voted that the MYR would have a slow rebound, and 14% opted for it staying p

To build on that, the Trade Statistics Special seeks to provide an overview of the key drivers of Malaysia’s trade performance in September 2023 that will serve as the foundation for the rest of the article. Read on as we zoom in to take a look at the SGD to MYR exchange rate, given how Singapore remains Malaysia’s top ASEAN export market and the impact that the sinking ringgit has on international businesses who have to transfer money in MYR.

LinkedIn Poll Results

To build on that, the Trade Statistics Special seeks to provide an overview of the key drivers of Malaysia’s trade performance in September 2023 that will serve as the foundation for the rest of the article. Read on as we zoom in to take a look at the SGD to MYR exchange rate, given how Singapore remains Malaysia’s top ASEAN export market and the impact that the sinking ringgit has on international businesses who have to transfer money in MYR.

Overview of Malaysia’s Trade Performance in September 2023

Understanding Malaysia's trade statistics and the broader economic factors that shape the MYR's journey in 2023 and beyond can be pivotal in guiding business strategies and decision-making, particularly in terms of how to send money in MYR or in monitoring the foreign currency exchange (FX) rates (such as rates between SGD to MYR for instance).

So this is for every international businesses who has to transfer money in MYR, we have compiled the key statistics that you need to take note of so you don’t have to:

  • Malaysia saw her 41st consecutive month of trade surplus in September 2023, where trade surplus registered a 42.7% growth from August to RM24.52 billion.
  • While trade surplus expanded from August 2023 to September 2023, there was a contraction of 23% in trade surplus (YoY).
  • Exports exceeded the RM1 trillion mark to hit RM1.060 trillion from January 2023 to September 2023
  • Electrical and electronic (E&E) products (valued at RM54.4 billion) contributed to 43.7% of total exports
  • ASEAN accounted for 27.1% (or RM60.91 billion) of Malaysia’s total trade
Note: Data from infographic and article taken from MATRADE and DOSM.

Zoom In: Navigating the SGD to MYR Exchange Rate

Singapore remains a pivotal ASEAN export market for Malaysia, accounting for RM18.48 billion of Malaysia’s exports in September. However, this figure reflects a 12% YoY decline from September 2022 when Singapore contributed RM21.00 billion to Malaysia’s export market. The implications of this shift emphasise the need for international businesses to closely monitor and adapt to the SGD to MYR exchange rate.

🔑  Read More: Demystifying International Payments: A Jargon-free Guide for SMEs

The exchange rate between the Singapore Dollar (SGD) and the Malaysian Ringgit (MYR) can be influenced by various factors, which may impact the economic dynamics of both countries. Understanding these factors can help individuals and businesses to make informed decisions when dealing with SGD to MYR transactions.

What affects the SGD and MYR exchange rate?

In the realm of currency exchange, the dynamics of the SGD to MYR exchange rate are multifaceted. According to CNA, Maybank chief forex strategist Saktiandi Supaat attributed the resilience of the Singapore dollar against the Malaysian ringgit to the differing approaches that each country takes in their interest rate policies:

Interest Rate Policy: Singapore vs Malaysia

Understanding these divergent interest rate policies and their impacts is vital for businesses and investors navigating the SGD to MYR exchange rate, given that they directly affect the relative values of these currencies.

🔑  Read More: Foreign Exchange (Forex) Rates: How Do They Actually Work?

What do experts say about where the SGD to MYR exchange rate is trending?

It remains to be seen whether Malaysia’s “economic fundamentals” in terms of “current account surplus and moderating inflation” can tide the country through the ringgit’s underperformance, as pointed out by BNM governor, Abdul Rasheed.

Geopolitical events will play a critical role in determining its trajectory, with 3.48 expected to be the “key resistance level”, according to FX Strategist at OCBC Singapore, Christopher Wong.

What is the impact on international businesses?

Zooming back out, in a world marked by currency exchange rate volatility, international businesses face unique challenges and opportunities as they navigate the complexities of how to transfer money across borders . The ability to navigate this volatility effectively can be a game-changer.

While traditional form of payments remain indispensable in the world of cross-border payments – “working with 11000 member institutions and facilitates $150 trillion in transactions per year” –  the last thing you need is to be at the mercy of FX rates or the exorbitant hidden fees.

How should international businesses approach the hidden fee dilemma?

When it comes to, the choice of your global payment provider is paramount.

This is where a Wallex multi-currency account steps in.

A Wallex Multi-Currency Account is what international businesses need to move from volatility to versatility. Not only can businesses now streamline their cross-border transactions, but they can also hedge against foreign exchange (FX) volatility. It provides a means to hold and manage multiple currencies in a single account, reducing the exposure to the risk of adverse currency rate fluctuations. This is especially crucial for businesses that frequently engage in cross-border payments, including SGD to MYR transactions.

Opening a Wallex Multi-Currency Wallet also means you have a dedicated FX provider monitoring the currency exchange rates and offering competitive FX rates that are aligned to your business needs. It's a powerful tool in your arsenal for thriving amidst the currency exchange rate fluctuations that are characteristic of international commerce.

🔑  Read More: How To Get The Best FX Rates For Your Business

Take Back Control of Your FX Needs with Wallex’s Multi-Currency Wallet

As we explored in this Malaysia Trade Statistics Special, having understanding on the trade statistics and economic indicators involved can prove pivotal in informing your business strategy.  

While you might not have control over geopolitical events or trade statistics that ultimately affect currency exchange rates, you still have the choice to be in control of your FX needs when you open a Wallex Multi-Currency Account.

Choose to move from volatility to versatility with your own Wallex Multi-Currency Wallet! Get in touch with our team today to find out more!

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