Singapore Dollar Hits Over 5-Year High Against US Currency

Singapore Dollar Hits Over 5-Year High Against US Currency

The Singapore dollar saw a more than five-year peak on February 2 after the United States central bank said it had passed a critical point and began to improve in the fight against inflation. The Singapore currency rose 0.2 per cent to 1.3038 per US dollar, its highest since January 2018, and after overnight gains, was up about 0.7 per cent since January 31.

The Singdollar has been on an upward trajectory this year due to rising expectations of easing inflation and less aggressive monetary tightening. It has gained about 2.7 per cent since ending 2022 at 1.3395 to the greenback. Other regional currencies such as the Philippine peso, Indonesian rupiah and the South Korean won have also strengthened between 0.7 per cent and 1 per cent to hit multi-month highs against a softer dollar.

“The Singapore dollar Neer (nominal effective exchange rate) has retreated from the top towards the midpoint of (the Monetary Authority of Singapore’s) policy band, a sign that policy focus may start to shift from inflation towards economic slowdown,” said Philip Wee, Foreign Exchange Strategist, DBS Bank in an interview.

The Federal Reserve raised interest rates by a widely expected 25 basis points on February 1. Its Chairman Jerome Powell said that a “disinflationary process has started”.