Going to Malaysia soon and you need to exchange some currencies, is it always a good idea to find and exchange money at a “best rate” money changer / bank?
This post is written based on my observations on the currency exchange rates offered by money changers on both sides of the Singapore-Malaysia border. I will be focusing mainly on Singapore Dollar (SGD) to Malaysia Ringgit (MYR) conversion.
Although this post is specifically on SGD and MYR from a Singapore perspective, it can be applied to any currencies anywhere — take this as an example to gain an understanding on how money exchange works.
Understand SGD-MYR Exchange Rate
Be mindful that the SGD to MYR exchange rate is NOT a single direct conversion between the two currencies — this applies to nearly all other currencies except with the United States Dollar (USD).
SGD to MYR exchange involves first converting from SGD to USD based on the SGD-USD exchange rate and then from USD to MYR using the USD-MYR exchange rate — there are two conversions. So, the SGD-MYR exchange rate is also influenced by the US Dollar and US interest rates, which is the main driver (or culprit) behind the depreciation of MYR from 2015 to mid-2024, followed by sudden appreciation till the Iran War in February 2026.
Once the “official / international / market” rate for SGD-MYR is determined (I will use “official rate” in this post for simplicity), it will be marked-up to include the seller’s commissions before being published as “selling rate”. The public will usually see “selling rates” of foreign currencies outside money changers or banks, never the “official rates”, which are mainly references.
Exchange Money at Money Changers
Why money changers can offer better rates than banks or other financial institutions? There are two ways to look at this.
First, money changers have lower cost overheads so they charged lesser commissions, typically 1 to 1.5%, whereas the bigger banks will charge 2 to 3%.
The other way to look at it is that money changers exchange currencies through their suppliers with a single mark-up on the “official” exchange rate. Banks or financial institutions, having more complex operations by trading or hedging with other financial institutions, will need to convert SGD to USD at a mark-up rate and than convert from USD to MYR with another mark-up rate. In general, the final rate may be marked-up at least twice and will include the commissions of all middle-parties.
I used to be in Fintech where money conversions are much more complicated than mentioned above. Any costs incurred in the exchange processes will ultimately be borne by consumers — you and me.
Confusion Between BUY and SELL Rate
This is a confusing topic that had once perplexed me too, so I will offer an explanation here.
In Singapore, the trading currency is SGD. So, when exchanging money into MYR, we are actually buying MYR as a product using our home currency. Money changers will show the rate for “MYR” under “(We) Sell” — they will sell MYR to you at that specified rate.
When you go over to Malaysia, the trading currency is MYR. So, when exchanging money from SGD to MYR, the money changers will be buying your SGD as a product with their home currency (MYR). They will show the rate for “SGD” under “(We) Buy” — they will buy your SGD at that specified rate.
So, even though the action is to exchange SGD to MYR in both cases, we have to look at different columns when in different countries.
More: Travel Tip: What are “We Buy” and “We Sell” Exchange Rates?
When SGD Rises Against MYR
When the official rate from SGD to MYR rises or is better than, say, a week ago, go over the border and exchange your money in Malaysia. One of the better places to exchange will be in KOMTAR JBCC, just next to JB City Square in Johor Bahru — the money changers there usually offer better rates than those in JB CIQ / JB Sentral.
Why go over the border? Assuming money changers in Singapore just buy in some stocks of Malaysia ringgits about a week ago at a poorer rate than the current value, they will not sell their MYR notes at the new rate where they will incur losses. What they will do is to buy in more MYR from their sources and average up with the stocks they bought previously. They will then offer the “averaged” rate.
On the other hand, money changers in Malaysia will be buying the SGD from individuals standing at their counters. They will have to use the “official rate” plus their commissions. Thus, exchanging currency in Malaysia will have better rate than exchanging in Singapore in this case. Even the “best rate” money changers in Singapore may not be better than in Malaysia.
When SGD Dropped Against MYR
Inversely to above, this will be the time to exchange for MYR in Singapore.
Again, assuming money changers in Singapore just buy in Malaysia ringgits at a better rate about a week ago, they will be able to sell their MYR notes at a rate that is better than the “official” rate since they will be able to make profits. By offering better rates than the “official” rate, they attract more customers.
On the other hand, money changers in Malaysia will be buying SGD from individuals at their counters regardless of the fluctuation. They will still use the “official” rate plus their commissions. Thus, exchanging currency in Malaysia will be at poorer rate than exchanging in Singapore.
In summary, exchanging for MYR in Singapore is based on the average rates that money changers get from their currency suppliers over a period of time and also their stockpiles of MYR notes. Exchanging in Malaysia is based on the “official” rate of the day.
When Exchange Rate is Flat
When exchange rate is almost flat for more than 2 weeks, exchanging currency in either Singapore and Malaysia will not have much difference — the margin will be insignificant. Any leverage in rate difference will be worn out over two weeks.
Is It Worth Going to a “Best Rate” Money Changer?
Yes… if the money changer is in close proximity to you without you having to incur any transport costs. Or if you happen to pass by the changer.
Yes… if you need to exchange an amount that is more than SGD 500 — assuming a gain of more than S$5 due to rate difference. If you need to travel all the way to a particular “best rate” money changer by car or public transports and back, the gain may be able to offset your transport costs.
NO, if you need to take transports and are exchanging less than SGD 500. The nett effect of transport costs will result in a poorer outcome for you.
So,exchange money when you happen to be in the vicinity of the “best rate” money changer, otherwise, a nearby money changer may be better even if it does not have the best rate.
* Note that SGD 500 is just a rough guideline.
Example 1:
- A money changer “A” near to you offer S$100 for RM300.
- A “best rate” money changer “B” (not near to you) offers S$100 for RM302.
- Assume your transport costs to and from money changer “B” is S$4.
If you exchange S$100 at “A”, your total expenditure is S$100 and get RM300. The effective outcome is 1:3.
If you exchange S$100 at “B”, your total expenditure is S$104 and get RM302. The effective outcome is 1:2.9 only, which is worst than exchanging at “A”.
If you change S$500 at “B”, your total expenditure is S$504 and get RM1,510. The effective rate is 1:2.996, which barely breakeven with “A”. So, you will need to exchange more than S$500 to improve the margin.
In other words, don’t blindly go for money changers with the “best” rate if it is not in close proximity to you. Do your sums first.
Example 2:
- A money changer “A” near to you offers S$100 for RM300.
- A “best rate” money changer “B” also near to you offers S$100 for RM302.
There is a 30-minute-minimum queue outside “B” whereas “A” has no queue. If you just want to change S$100 to MYR, which money changer will you go to?
I will opt for “A”. I will not queue for at least 30 minutes just to save S$0.67 — that’s sixty-seven cents only! But, if I am changing more, say, S$1,000, then I may consider “B” for a meagre saving of S$6.67.
Disclaimer: This post is based on my observations as a traveller needing to exchange currencies. I have no insights into any financial operations of any money changers / banks.
As technology evolves, cashless payment methods are offering better exchange rates than brick-and-mortar money changers / banks. For Singapore residents, check out YouTrip:
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