Singapore’s dollar advanced to its strongest in almost a decade as traders weighed the difference between the Monetary Authority of Singapore’s (MAS) relatively hawkish policy outlook compared with that of the Federal Reserve.
The local dollar hit levels last seen in 2014 against the greenback late Friday, and fluctuated around the 1.30 per dollar in early trading Monday. Singapore’s currency has gained about 1.5% this year, the second-best performer in Asia behind Malaysia’s ringgit.
MAS, which uses the exchange rate as its main monetary policy tool, maintained an appreciating bias for the currency at its July meeting to rein in inflation. US Federal Reserve Chair Jerome Powell all but confirmed that interest rate cuts are coming to the US next month, speaking at the central bank’s annual symposium in Jackson Hole, Wyoming.
Singapore’s government upgraded this year’s growth forecast in July to a range of between 2% and 3%, from an earlier band of 1% to 3%, citing a resilient external demand outlook. An expanding economy may help underpin further currency gains.
Chart: Bloomberg
