Singapore Dollar Hits New Highs Against US Dollar Amid Differing Monetary Policies

Monday, 26 August 2024, 04:44

Singapore's dollar reaches its strongest point since 2014 as traders analyze the contrast between local monetary policy and that of the US dollar. The Monetary Authority of Singapore maintains a hawkish tone, enhancing the local currency's resilience. In contrast, the US Federal Reserve signals possible interest-rate cuts, weakening the greenback's position.
South China Morning Post
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.


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