KUALA LUMPUR (Oct 13): The ringgit on Thursday (Oct 13) closed at a new record low of 3.2738 against the Singapore dollar, compared with Wednesday’s close at 3.2609, as the island republic’s currency benefited from expectations of a tightening move by the Monetary Authority of Singapore (MAS) on Friday to curb inflation.

The ringgit had depreciated to its weakest level against the Singapore dollar earlier in the day, between a low of 3.2743 and a high of 3.2615.

“SGD-MYR was last seen modestly below 3.27, making new record highs, as ringgit sentiments remain fragile, even as the Singapore dollar benefits from expectations of the MAS’ tightening move tomorrow (Friday),” Maybank Investment Bank Bhd analysts Saktiandi Supaat, Tan Yanxi and Fiona Lim wrote in a note on Thursday.

According to the MAS’ website, the regulator is scheduled to announce its monetary policy statement at 8am on Friday.

Unlike other countries’ central banks, which adjust their respective interest rates as part of their monetary policies to support economic growth and curb inflation, the MAS’ monetary policy involves the adjustment to the Singapore dollar nominal effective exchange rate (S$NEER) policy band.

The MAS said in its latest monetary policy statement on July 14 that since October 2021, it has been progressively tightening monetary policy, as the economic recovery consolidated and inflationary pressures picked up.

“The MAS has assessed that it is appropriate to further tighten its monetary policy stance, so as to lean against price pressures becoming more persistent,” the regulator said.

Across the broader currency market, it was reported that Asian currencies were broadly flat, as investors stuck to the sidelines ahead of highly-anticipated US inflation data on Thursday, after minutes from a US Federal Reserve (Fed) meeting reiterated that rates would likely remain higher for longer.

A strong US inflation print could reinforce expectations of aggressive Fed policy tightening, weighing on riskier assets, Reuters reported.

“I think the message is a similar one...no pain, no gain,” said Moh Siong Sim, a currency strategist at Bank of Singapore, referring to the idea that without higher interest rates, there would be no economic gain in terms of lower inflation.

“It sends a message that they mean business, and the market has taken on that message,” Sim was quoted as saying.

The ringgit had also weakened against other currencies, most notably to 4.6925 against the US dollar. Compared with the euro, it had depreciated to 4.5642.

The ringgit also weakened to 2.9528 against the Australian dollar, and depreciated to 2.6417 compared with the New Zealand dollar.