Monday, July 18, 2011

Singapore Dollar (SGD) vs. Malaysia Ringgit (MYR)

In life, it is always good for one to benchmark ourselves with peers, seniors and the outperform juniors to gauge where we are. It tells if we are competitive or losing ground.

MYR convert to SGD calculation chit from money changer

How can we judge if a country is well managed? A part from GDP, income per capita, and the balance sheet, the exchange rate of the currency will also be able to tell the strength of the financial elements of a country.

In June 2010, I have posted an articled named “Malaysia vs. Singapore”. During that time, the exchange rate between MYR to SGD is at 2.2 to 2.3. Yesterday, I have just exchanged MYR1000 with SGD400 and balance of MYR8.00. The exchange rate between MYR to SGD has already gone up to 2.48. Singapore Dollar has appreciated by approximately 10% in a year time.

Let’s do an extrapolation from here; if SGD vs. MYR is appreciating at the pace of 10% every year, the exchange rate between MYR to SGD will be as below:

2012- MYR2.72 to SGD1.00
2013- MYR2.99 to SGD1.00
2014- MYR3.29 to SGD1.00
2015- MYR3.62 to SGD1.00

The public were informed by the main stream media that the Malaysia Ringgit is gaining ground as MYR vs. USD has gone historical high at MYR3.00 to USD1.00. Most of us is believing that Malaysia is progressing towards the right track, but the real story is reverse. The USD is weakened due to the QE1 and QE2. Hence, the USD shall not be taken into the currency benchmarking consideration.

As part of the Asia region, MYR shall be benchmark against major currency like Singapore Dollar (SGD), Australian Dollar (AUD), Japanese Yen (JPY), Chinese Renminbi (RMB), etc.

At a glance, Malaysia Ringgit has weakened against all the 4 major Asia currency listed above since the financial crisis in September 2008.

The impact of the devaluation of Ringgit Malaysia would be inflation, larger deficit in the national budget (you need to spend more MYR in exchange of same quantity of goods, and the sad thing is Malaysia is running on deficit budget for more than 10 years already), and followed by brain drain.

I just can't imagine the financial standing of Malaysia in another 10 years time.

Related posts:
1. Malaysia vs. Singapore
2. Singapore vs. Malaysia 2

1 comment:

Jayce said...

Maybe it's time to migrate to SG? ^_^


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