SGD to MYR at 2.5-year high amid weaker oil sentiment
The Malaysian Ringgit fell on Tuesday evening against the Singapore dollar as palm oil prices hit a nine-month low amid bearish global oil sentiment.
The Singapore dollar (SGD) rallied to a 30-month peak against the Malaysian Ringgit (MYR) on Tuesday 28 April 2020 evening, as the export-reliant ringgit fell on the back of declining oil prices.
Ringgit dragged down by falling palm oil price
Malaysia, the world’s second largest palm oil producer, saw the price of crude palm oil fall under 2000 ringgit per tonne (based on IG trading data) – the lowest level since July 2019 during the height of the US-China trade war, as a result of bearish oil sentiments.
Oil prices had plunged at the start of the week – the second time in less than a week that it went into a sharp decline.
On Monday 27 April, WTI futures reportedly plunged roughly 25% after the US$3.25 billion United States Oil Fund – the largest oil Exchange Traded Fund (ETF) in the US – said it would be selling all of its front-month crude holdings for June 2020 in the next four days.
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The ringgit then fell 0.41% against the SGD to hit RM3.0835 at 22:30 SGT.
The SGD/MYR has since pared some of those overnight gains, as WTI crude oil prices clawed back above the US$15 mark. IG’s data shows WTI futures trading at US$15.66 as at 18:00 SGT on Wednesday 29 April 2020.
Malaysia government greenlights certain sectors to operate at 100%
The ringgit also rebounded after the Ministry of International Trade and Industry announced that economic sectors that were allowed to stay open during phase one, two and three of the movement control order (MCO) have been greenlit to increase their operations back to full capacity starting from 29 April.
Since the MCO was implemented on 18 March, essential services such as water, energy, waste management, banking and finance and e-commerce, as well as critical product manufacturers of food and medical devices have been allowed to continue operations.
The list was widened in mid-April to include certain non-essential sectors such as aerospace, automotive and construction.
The MCO was extended for the third time on 23 April by another 14 days to 12 May 2020.
The country has nearly 6,000 confirmed Covid-19 cases and 100 deaths as at 18:00 (SGT) on 29 April 2020.
Gain access to top 30 Malaysia companies by trading on the KLCI index. You can go long or sell short on the KLCI index and the Emerging Markets Index using CFDs and other instruments offered on IG's world-leading trading platform. Start today by opening a live or demo IG account.
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