OCBC foreign exchange strategist Chris Wong said the ringgit’s recent weakness looked “more like a near-term market adjustment,” as reported by The Straits Times.
Higher oil prices, firmer U.S. Treasury yields and broader risk-off sentiment have weighed on regional currencies, while a recent sell-off in Malaysian government securities has hurt sentiment toward the ringgit, he said.
Higher U.S. Treasury yields can weigh on emerging-market currencies such as the ringgit by making U.S. assets relatively more attractive.
“Domestic fundamentals remain relatively supportive, with growth, investment and the external sector still holding up,” Wong added.
The ringgit weakened to 3.22 against the Singdollar on Wednesday. It has weakened 1.86% against the Singapore dollar so far in 2026, after gaining 3.77% last year.
The Singdollar has its own sources of support, with the Monetary Authority of Singapore having tightened monetary policy twice in a row in 2026.
Singapore’s strong domestic growth has also enabled it to maintain a policy of allowing the Singdollar to appreciate against the currencies of its trading partners.
Zavier Wong, a market analyst at trading platform eToro, said uncertainty over how the Malaysian government will fund its fuel subsidy plans has contributed to foreign outflows from the country’s assets.
“The subsidy bill is what’s pulling money out of Malaysian equities right now because there’s an element of uncertainty there,” he said.
He noted that the Malaysian government is restoring the monthly quota under its targeted fuel subsidy scheme at a time when oil prices remain elevated, raising questions among investors about the eventual cost and how it will be funded.
“What we’re seeing play out here is simply investors pricing in the uncertainty until the government tells them where that money’s coming from,” Zavier Wong added.
The ringgit is expected to remain under pressure until Malaysia unveils its Budget on Oct. 9, when the government is expected to provide greater clarity on how the subsidies will be funded.
“Once that number’s public, the market can then move beyond a guess,” Wong said.
He noted that some of the funding could come from additional bond issuance, adding that investors would be watching the impact on Malaysia’s debt burden.
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A money changer counts Malaysian ringgit banknotes for customers in Kuala Lumpur on June 11, 2015. Photo by AFP |
The Singdollar’s strength is largely underpinned by the Monetary Authority of Singapore’s exchange-rate framework, which manages the currency against a basket of currencies of its major trading partners, said Saktiandi Supaat, head of FX research and strategy at Maybank, as quoted by The Business Times.
Strength in major currencies such as the yen, along with positive sentiment toward Singapore equities, has provided additional support for the Singdollar, he added.
Trading platform Saxo’s sales trader Sean Teo said the ringgit’s weakness against the Singdollar also reflects strength in Singapore’s currency, which has benefited from safe-haven flows and Singapore’s tighter monetary policy stance.
“In the current environment of heightened global uncertainty, Singdollar and Singapore-based assets have become relatively more attractive given Singapore’s political stability and strong fiscal position,” he said.
Teo added that the Monetary Authority of Singapore remains relatively hawkish as it seeks to guard against inflationary pressures from higher oil prices, while Malaysia’s monetary policy stance remains more geared toward supporting growth.