The recent exchange rate forecasts for the SGD to MYR reflect a challenging environment influenced by escalating trade tensions and tariff announcements from the U.S. President Donald Trump. An analyst noted that the imposition of a 10% tariff on Singapore imports and a more substantial 24% tariff on Malaysian goods have led to increased volatility in regional currencies, including both the SGD and MYR.
In the face of these tariff measures, emerging Asian currencies exhibit a deteriorating outlook. Market analysts have highlighted that both the Thai baht and South Korean won have depreciated around 2% as concerns over a potential global trade war diminish risk appetite among investors. This sentiment has also contributed to a rollback of the earlier gains seen in Asian currencies, as central banks in the region, including Malaysia's, have responded with interest rate cuts to boost economic growth.
The SGD is currently trading around 3.3147 to the MYR, a level consistent with its three-month average, demonstrating stability within a 3.3% range from a low of 3.2593 to a high of 3.3654. This stability is, however, fragile, as external factors such as tariffs and regional economic performance weigh heavily on the currency outlook.
Simultaneously, fluctuations in oil prices are adding another layer of complexity to the MYR's performance, given Malaysia's dependence on oil revenue. The price of Brent Crude oil in USD is trading at 68.80, approximately 3.2% above its three-month average, following extreme volatility in the market where it has fluctuated widely from 60.14 to 78.85. That movement is likely to further impact MYR performance, as stronger oil prices might bolster the currency while lower prices could exacerbate any negative effects from the tariffs.
In summary, the combination of ongoing trade tensions, tariff impositions, and shifting oil prices suggests that both the SGD and MYR will continue to navigate a challenging landscape. Stakeholders in the currency markets are advised to remain vigilant as these factors evolve, potentially influencing transaction costs in international dealings.