In a small saucepan, combine sugar and water. Heat over medium, stirring until the sugar is fully dissolved.
Add the toasted coconut to the syrup and let it gently simmer for 2–3 minutes.
Remove from heat and allow the coconut to steep in the syrup for 10–15 minutes for a stronger flavor.
Pour through a fine mesh sieve, pressing lightly to extract all liquid. Discard the coconut solids.
Let cool completely, then transfer to an airtight container and refrigerate.