Quora Answer: When Will the Malaysian Ringgit be Stronger Than the Singapore Dollar?

The following is my answer to a Quora question: “When will the Malaysian ringgit be stronger than the Singapore dollar?”

Since the currency union between Malaysia, Singapore, and Brunei broke down in 1967, the Malaysian ringgit has never once traded stronger than the Singapore dollar.  Not for a single day.  Fifty-nine years of continuous data, and the ringgit has spent every one of them on the weaker side of the pair.  The rate today sits at roughly 3.16 ringgit to one Singapore dollar, comfortably within the range it has occupied for the better part of two decades.  When someone asks when the ringgit will finally overtake the Singapore dollar, the honest answer is: not within any timeframe worth planning around, and the reasons are structural rather than cyclical.

The Structural Gap, in Numbers

Singapore’s GDP per capita stood at $98,814 in 2025.  Malaysia’s stood at $13,125.  That is a gap of roughly 7.5 times, and even adjusting for purchasing power, the gap remains stark: $150,689 for Singapore against $38,779 for Malaysia, a factor of nearly four.  The Heritage Foundation’s Index of Economic Freedom scores Singapore at 84.4, ranked first globally.  Malaysia scores 68, ranked 51st.  These are not close numbers separated by policy tweaks.  They represent two fundamentally different institutional architectures, one built on regulatory efficiency and rule of law attracting global capital, the other still carrying the drag of policies designed for a different era entirely.

Malaysia’s New Economic Policy, introduced in 1971 and its successor frameworks since, embedded ethnic quotas and preferential allocation into corporate ownership, government contracts, and university admission, in the name of redressing historical inequality.  Whatever the original justification, the effect over five decades has been a persistent misallocation of capital and talent away from pure merit and productivity.  Malaysia’s own brain drain confirms the consequence directly.  Hundreds of thousands of Malaysians, disproportionately ethnic Chinese and Indian professionals who felt the ceiling the policy imposed on them, have relocated to Singapore, where an estimated one million Malaysians now live and work, forming one of the largest single foreign populations in the city-state.  A country that exports its most productive citizens to the neighbour it is supposedly competing against does not close a currency gap.  It widens it, year after year, one departing engineer at a time.

Bank Negara Malaysia’s Incentive

Bank Negara Malaysia has no genuine institutional interest in seeing the ringgit strengthen past the Singapore dollar, even if the structural gap above somehow closed overnight.  Malaysia’s economy remains heavily export-dependent, running on electronics, palm oil, and petroleum products sold into competitive global markets.  A stronger ringgit makes every one of those exports more expensive and less competitive the moment it appreciates meaningfully.  BNM operates a managed float, not a free float, because an uncontrolled ringgit rally would damage the export sector its own mandate is partly built to protect.

When the Asian Financial Crisis hammered regional currencies in 1997 and 1998, Tun Dr. Mahathir bin Mohamad, then Prime Minister, rejected the International Monetary Fund’s prescribed orthodoxy outright.  On 1^st September 1998, Malaysia imposed capital controls and fixed the ringgit at RM3.80 to the US dollar, a rate chosen to support export competitiveness rather than to reflect market fundamentals.  The same month, his deputy, Dato’ Seri Anwar bin Ibrahim, who had pushed for IMF-style liberalisation, was sacked and subsequently prosecuted, a political rupture that still echoes through Malaysian politics today.  Mahathir’s peg held until 2005, when Malaysia finally shifted to a managed float.  The lesson from that episode has never actually left Bank Negara Malaysia’s institutional memory: currency strength is not treated as an unambiguous good.  It is treated as a variable to be managed in the service of export competitiveness, political stability, and whichever administration currently holds power.

The Conclusion

The ringgit will not become stronger than the Singapore dollar without Malaysia addressing the structural drag on productivity and capital allocation that decades of race-based economic policy have embedded into its economy, and without reversing a brain drain that keeps handing Singapore precisely the talent Malaysia cannot afford to lose.  Even if that structural reform happened, Bank Negara Malaysia’s own policy incentives run in the opposite direction, because a genuinely strong ringgit would injure the export sector the central bank has spent decades protecting.  Asking when the ringgit will overtake the Singapore dollar is, in effect, asking when Malaysia will choose structural reform over export competitiveness and political convenience simultaneously.  Fifty-nine years of data suggest that day is not on the calendar yet.

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Terence Nunis | Executive Chairman, Equinox Zenith | Author, The 1% Playbook: The Billionaire Cheat Code