International oil prices have plunged by nearly 60% since they peaked in 2014. The dramatic fall in oil prices also dragged with it the Malaysian equity and forex markets. Those living in Johor Baru can understand the pressure from the depreciating ringgit much more than those living elsewhere in the country. The ringgit has fallen almost 9% over the last three months, and the depreciation rate has been among the sharpest among major Asian currencies. 1 Singapore dollar can be exchanged for RM2.66. Back in the 70s, the ringgit was bigger than the Singaporean dollar. I was working in Singapore then. For every dollar that I made across the Causeway, I could only exchange it for 90 sen. However, since the 80s, the Malaysian ringgit began to soften while the Sing dollar was strengthening. Back then some predicted that the Sing dollar could rise to RM1.50, although many dismissed it as impossible. The reality is: for the past three decades, the ringgit has been very weak vis-à-vis Singapore dollar. Today, the dollar is traded at RM2.66, far beyond the doomsday prediction of RM1.50. In response to the weaker ringgit, what the Johoreans do is visit Singapore less because of the higher vehicle entry levy and a robust Singaporean dollar. Unless it is really necessary, making a trip to the Republic would be avoided at all costs. JB residents loved to travel to Singapore for shopping back in the 1980s because of the cheaper prices there. But as every a thousand ringgit can only be exchanged for SG$376 today, the money Johoreans bring across the Causeway shrinks remarkably, and shopping becomes a luxury. The good thing about a weak ringgit is that Singaporeans, who were earlier put off by the higher entry levy imposed by the Malaysian government, are back in droves, clogging both the Causeway and Second Link with trans-boundary traffic. The seemingly oversupplied JB property market once again sets its eyes on the loaded Singaporean buyers. Retail, F&B and tourism are all prepared to usher in the good days again. Of course, the biggest beneficiaries of the a strong Sing dollar are Malaysians working in the city state, making their money in Sing dollars and spending it across the Causeway in ringgit. I wont be surprised more people are looking for job prospects in Singapore. But will this mean our own manufacturers will face another round of workers’ exodus? And will the real estate and goods prices in JB soar beyond our means because of this? Economists say that the disparity between the currencies of Malaysia and Singapore reflects the expanding gaps of our economic fundamentals. While an economy illiterate like me knows little about this theory, the feeling towards our pathetically weak ringgit is very real as soon as we set foot in Singapore.
Posted on: Sat, 17 Jan 2015 10:03:37 +0000
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