Singapore Dollar Hits New Highs Against US Dollar Amid Differing Monetary Policies
Singapore Dollar Reaches 2014 Highs
Singapore's dollar has made significant gains against the US dollar, reaching levels not seen since 2014. As of early trading on Monday, the local currency trades around 1.30 per US dollar, marking a 1.5% gain this year, making it the second-best performer in Asia.
Diverging Monetary Policies Drive Currency Movement
The Monetary Authority of Singapore (MAS) is maintaining an appreciating bias on the currency, which it primarily uses as a tool for monetary policy. This hawkish outlook, presented during the July meeting, aims to combat inflation, leading to an upgraded growth forecast between 2% and 3% this year. In contrast, Jerome Powell, Chair of the US Federal Reserve, indicated interest-rate cuts are on the horizon, affecting the Greenback's strength.
Market Reactions
Christopher Wong, an FX strategist at OCBC Bank Singapore, noted that the Singapore dollar continues to perform with a strong bias against the falling US dollar. However, he cautioned that near-term gains might be limited due to the MAS's strategy regarding the nominal effective exchange rate (S$NEER).
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.