Pressure mounts for vulnerable SGD as regional currencies stumble
http://sbr.com.sg/economy/news/pressure ... es-stumble
The Monetary Authority of Singapore’s (MAS) trade-weighted measure of the currency reached a record high after Britain voted to exit the European Union. It has reversed losses incurred after the MAS surprised markets by moving to a neutral policy of 0 per cent appreciation in April. That’s prompting ABN Amro Bank, Royal Bank of Scotland and Nomura Holdings to predict more easing.
The next review is due in October.
The local dollar has appreciated 5.1 per cent to 1.3491 against the greenback this year, the third-best performance in Asia.
The currency will weaken to S$1.40 by end-2016, according to the median estimate of analysts in a Bloomberg survey.
The range for the USD/SGD in the last 10 years has been about 1.60 – 1.20 Singapore Dollars/US Dollars, making it much less volatile than most other currencies including the EUR/USD pair. It now trades at about the 136 level.
Despite the slower economy, the MAS has signaled that they will refrain from monetary easing next month. This has been substantiated by the change in the forward currency rates manipulated by the MAS.
Barring any surprises, we might expect the USD/SGD to remain in its relatively narrow “band” in the near future.
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