Singapore dollar hits 11-year high against greenback
Singdollar breaches 1.27 level to strongest since 2014, driven by intervention rumors
[SINGAPORE] The Singapore dollar strengthened to its strongest level against the greenback since late 2014 on Monday (Jan 26).
The USD/SGD currency pair slumped to 1.2679 during trading hours on Monday, at 10.40 am Singapore time. Conversely, the Singdollar strengthened to around 0.7887 against the greenback.
The greenback faced fresh headwinds amid market chatter that the US might coordinate with Japan on currency intervention. Rumours of the joint intervention have weighed heavily on the US dollar, dragging down the US dollar index to 97.09 as at 11.15 am.
Domestic strength
The Monetary Authority of Singapore (MAS) is in a “comfortable” position to maintain its current appreciation policy, and is widely expected to leave its exchange-rate settings – the slope, width and mid-point of the policy band – unchanged at its upcoming review on Thursday, analysts from Maybank said in a Monday note.
“MAS should be in a relatively comfortable position (in contrast to the Fed) to maintain current policy stance of slight (0.5 per cent per annum) appreciation, which should provide support for the Singdollar,” they said.
In contrast to the fiscal uncertainties plaguing other developed markets, DBS analysts noted in a Monday note that Singapore Government Securities have outperformed global peers, attracting “flight-to-quality” inflows from investors wary of the fiscal risks in the US and Europe.
Maybank analysts echoed this view, citing the firmness of the trade-weighted Singdollar as “evidence of Singapore’s safe-haven appeal”.
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