Singapore Dollar-specific Factors Contributing to Persistent Weakness against Malaysian Ringgit

Mr Yip Hon Weng asked the Prime Minister and Minister for Finance (a) what Singapore dollar-specific factors have contributed to its persistent weakness against the Malaysian ringgit; (b) what implications a sustained slide below the exchange rate of 3 Malaysian ringgit/Singapore dollar may have on Singapore’s labour market; and (c) whether MAS will consider strengthening policy settings or adjusting the exchange rate band to ensure stability.

Sir, the Singapore dollar (SGD) has appreciated against the Malaysian ringgit at an average rate of 1.3% per annum over 2020 to 2025. However, it is important to emphasise that the Monetary Authority of Singapore (MAS) manages the SGD against a trade-weighted basket of currencies of its major trading partners and not against any bilateral exchange rate. The SGD trade-weighted exchange rate has been on a gradual appreciating path since October 2021. The strength and stability of the SGD is assessed against the attainment of medium-term price stability in the economy.

Non-resident labour flows into Singapore principally reflect the economy’s overall growth and employment prospects.

MAS will continue to closely monitor economic and financial developments and is in an appropriate position to adjust its monetary policy stance to ensure medium-term price stability.

Thank you, Mr Speaker. I thank the Minister of State for his response. With the Johor Bahru-Singapore Rapid Transit System (RTS) Link, expected to begin operation soon, cross-border travel will become faster and cheaper, making it even easier for consumers to travel across the Causeway and tap on the services there. Coupled with a weaker SGD, this could significantly reduce demand for local retailers, and food and beverage (F&B) outlets.

Will the Government look into forward looking support measures to help local businesses prepare for this shift, given the potential impact on Singapore jobs and household incomes?

Sir, I thank Mr Yip Hong Weng for his question. I am answering this Parliamentary Question in my MAS hat, but he's asked a question wearing my Ministry of Trade and Industry (MTI) hat. In fact, this is regard to the RTS Link, and of course there are some relationships with the SGD as well as Malaysian ringgit. In fact, earlier this morning I met with the RTS Link Task Force, of which I am chairing to look at ways in which to enhance our local business, their competitiveness, their ability to place-make. In the MTI Committee of Supply, we have also announced many enhancements to the grants and support for heartland businesses, looking forward to both the challenges as well as opportunities of the RTS Link when it is operational at the end of the year.

So, as chairman of the RTS Link Task Force, we are looking at this very carefully. We have met with the merchants. We have met with Government officials, including Enterprise Singapore, the Housing and Development Board (HDB) and the National Environment Agency (NEA) this morning. And we will announce these measures in due course.