The Singapore dollar yesterday touched a record high against the Malaysian ringgit - and at least one analyst believes the rate could be headed for RM3.30.
The Singdollar surpassed the previous high of RM3.16 to move above RM3.17, sitting at around RM3.173 by early last evening.
Its gain against the Malaysian currency is now more than 2 per cent since the start of the year, when the exchange rate was RM3.1065 to the Singdollar.
Yesterday's currency movement resulted from the Singdollar gaining strength while the ringgit stayed weak, said Mr Jeremy Cook, chief economist of foreign exchange company World First.
"The Singdollar is back in favour as the United States dollar weakens amid the belief that the rhetoric from the Trump administration is not as pugnacious as it was in the campaign and the wider trade environment is therefore less combative," Mr Cook told The Straits Times.
2% Singapore dollar's gain against the Malaysian ringgit since the start of the year.
The greenback fell further yesterday to below 1.40 against the Singdollar, which counts the US currency as one of its major pegs.
"Meanwhile, Bank Negara Malaysia has not been able to smooth out the ringgit's depreciation given its weak foreign currency reserves. This leaves traders unwilling to meaningfully back the currency," Mr Cook said.
Leaving aside the latest slide of the US dollar, the ringgit has seen a prolonged battering, owing in part to still depressed global oil prices, given that Malaysia is a major oil producer.
A rebound for the ringgit this year is unlikely, said IG market strategist Pan Jingyi, who noted: "With the (Federal Reserve) still looking for two to three hikes this year and a positive outlook for US growth, the US dollar is likely to strengthen once again into the year. This could weigh on the Singapore dollar, sending it softer against the already weak ringgit."
"Nevertheless, given the current trend, Singdollar against ringgit may find 3.10 serving as a support into the end of the year," added Ms Pan.
Mr Cook said the Singdollar's strength will depend on US trade policies, which still lack clarity.
"Should stances on trade continue to soften to a more 'free' way of doing things, we would be looking for a continual run in the Singdollar. Oil prices should be able to keep the ringgit supported on a terms of trade basis, but we could easily see a run to 3.30," he said.