Singapore dollar hits new high
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The way the Singaporean dollar is going, there might be no better time to go on that dream holiday to Japan or Europe.
The Singdollar is trading at new multiyear highs against the Japanese yen, the euro and the British pound. Analysts expect the currency to continue strengthening against its major trading partners as the central bank remains focused on managing inflation for the rest of the year.
This week, the Singapore Monetary Authority will release a policy statement that will set the tone for how the currency will perform for the next six months.
But most analysts expect the central bank to maintain a modest and gradual dollar appreciation.
The exchange rate is the government’s key tool to fight inflation.
A stronger Singdollar makes imports like crude oil cost less in Singdollar terms.
This is despite a string of disappointing economic data releases which point to weak economic growth in the first three months of the year.
Maybank’s head of foreign exchange research, Saktiandi Supaat, said that inflation risks continue to outweigh concerns over slow growth.
“The current growth weakness, even if it prolongs in the second half of the year, is not sufficient to alleviate the tightness in the labour market and remove the continuing price pressures in the economy,” he said.
Sim Moh Siong, senior currency strategist at the Bank of Singapore, noted that the global economic outlook is improving.
“Given reduced downside global growth risks, recent soft domestic growth data is unlikely to sway the policy focus away from keeping inflation under control,” he said.
But the Singdollar is not expected to do well against the Australian dollar, which has been one of the strongest-performing currencies this year.
While inflation fighting might be uppermost on the minds of the MAS chiefs, a rising Singdollar makes many Singaporeans think of the bargains awaiting them overseas. “The yen has depreciated, so the packages are less expensive now.,” she said.
Seah added that on the back of the persistently weak euro, CTC is also seeing more repeat travellers to the region.
