On Monday (May 23), the Singapore dollar reached an all-time high against the ringgit, according to Channel NewsAsia (CNA).
The Singapore dollar achieved a record high of RM3.1964 at 1.48 p.m. on Monday, mostly due to the strength of the Singapore dollar, before weakening to RM3.1950 later in the day, according to a news website citing Simon Harvey, the head of foreign currency (FX) analysis at MonFX.
It was the technicalities of Singapore's monetary policy, not a singular incident, that led to this record high, he was reported as saying.
According to the FX study, sentiment towards China also helped.
The yuan reached its best level since May 5 on rumors that US President Joe Biden was considering reducing tariffs on Chinese products, as reported by Harvey.
"With the yuan being the greatest proportion of Singapore's S$NEER basket, the yuan's appreciation pushed the Singapore dollar higher as currency traders sought to balance the Singapore dollar's depreciation against the yuan with other currencies.
"This resulted in the Singapore dollar appreciating against other major trading partners, such as the U.S. dollar (+0.49%), ringgit (+0.13%), Hong Kong dollar (+0.47%), and yen (+0.05%), so that the S$NEER exchange rate continued to rise in accordance with [the Monetary Authority of Singapore's] (MAS) preference," he said.
Tuesday at 9:01 a.m., the ringgit was worth 3.1925/1955 Singapore dollars.
The MAS, the central bank of the republic, formulates monetary policy by establishing a path for the S$NEER (Singapore dollar nominal effective exchange rate) policy band to promote medium-term price stability.
Singapore's monetary policy was tightened in April 2022, after policy adjustments in October 2021 and January 2022, in an effort to decrease inflation and promote medium-term price stability.
It was reported on Monday that Singapore's core inflation increased to 3.3% year-over-year in April 2022, from 2.9% in March, due to rising prices for food, retail, and other items, as well as energy and gas.
According to reports, the increase in April was the most since February 2012.
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