Malaysia is getting expensive

Malaysia Ringgit (MYR) is in the news recently. It grew stronger against Singapore Dollar (SGD). There are mixed responses to the behavior of MYR. 

Anwar supporters were quick to claim credit for him; it has to be his policies and actions that led to increased demand for MYR. Even though the political arena still lazed with racial discrimination and incompetent leadership. These leaders main concern is alcohol being served at banquet and the latest attraction being the rain fountain at KLIA, Malaysia's international airport. When a local comedian joked about the roof leak in the international community, he is deemed unpatriotic, by these leaders.

Malaysians working in Singapore complain that it is equal to them having a pay cut, strange that the number of Malaysian crossing the border to work in Singpaore daily still doing so, suffering hours of jam just to earn some SGD, since even when MYR strengthened against SGD, they still cannot get the same income working in Malaysia, the ratio is really 3 to 1 because the pay amount remain the same, except that one in MYR while the other in SGD.

In fact, the latest local election result in Sabah this week says it all. Of the 73 seats contested, GRS ( an ally of Anwar Ibrahim) won 29 seats, its rival Warisan with 25 seats while PH with only 1 seat. DAP , a component of PH, contested for 8 seats and loss. No party can claim majority in this election, which is what I favored. At the same time, it is an indication of distrust from the people to the present political arena.

The thing is that the strengthening of MYR is not a recent thing. I have already predicted this to happened back on14th September 2024 in A belated happy birthday to Malaysia...or was it a little too early? . Mind you, I am not saying how good I am, it is what the chart was saying at that time. This means that the market already sensed that the time that the Malaysia economy was improving.

Fig 1. MYR weekly chart

In my last update on this pair, estimated its support at 4.2836, and if broken, we should see support between 3.6987 to 3.8996. It plunged to a depth of 4.0940 before correcting to a high of 4.5160, testing its 55-week moving average. It has been on a continuation downward thereafter, reaching a low of 4.1185.

I am not seeing the bottom for the time being, since the moving average alignment in agreement with its trend. Furthermore, its MACD is in the negative zone, and moving downward. It seems that there is still momentum for more downside.

Unlike SGDMYR, it is yet to reach its 61.8% projection support at 4.0821, but a stronger support should be located at 3.9510, which is its 100% minor projection and its 61.8% major projection. 

Fig 2. SGDMYR weekly chart

I estimated support for SGDMYR may be between 3.2189 to 3.2838, it reached a low of 3.1975 before congesting. It retested the 55-week moving average twice before continuation presently reaching a low of 3.1633. Is this a good time to exchange MYR for SGD (Gosh! I can't believe I am saying this one day)?

On a minor scale, it is close to its 100% projection support level of 3.1507. However, I am seeing a mild congestion before continuation, it may retrace back up and the resistance I see is 3.1888 and if broken, 3.2844. On continuation, I see the next support level will be 3.0895 to 3.1013. This is also the same level with a major projection support of 61.8%.

For the time being, the downtrend is also support by its moving average alignment as well as MACD which is presently in the negative region. 

 

The thing is that having stronger MYR is not exactly a good thing. The weaker currency earlier gave enough excuse for inflation causing price to skyrocket, reducing the spending power of the people. Even when MYR has become stronger now, price is not going down.

Singapore on the other hand, has been maintaining a strong SGD thereby limiting the effect of inflation, as a result, goods in Singapore have been affordable till now. With a stronger MYR now, Singaporeans may be a little more reluctant to spend in Malaysia.