The Singapore dollar rose 0.3% to S$1.3370, its highest in nearly six weeks
Singapore’s dollar firmed on Wednesday after the central bank, encouraged by better-than-expected economic growth, held out on monetary policy, while most emerging Asian currencies gained as investors were unfazed by higher than expected U.S. inflation.
The Monetary Authority of Singapore (MAS), which lets the local dollar rise or fall against currencies of its main trading partners within an undisclosed band, left its accommodative policy stance unchanged, as expected.
Preliminary data released on Wednesday showed Singapore’s economy unexpectedly grew 0.2% year on year (YOY) in Q1, and the MAS said it expects growth to exceed the upper end official forecast range of 4-6%.
That pushed the Singapore dollar up as much as 0.3% to S$1.3370, its highest in nearly six weeks.
Confirmation that the MAS has an improved outlook has raised the possibility that it could undo some of the easing – perhaps as soon as October – if economic conditions strengthen, analysts at Singapore bank DBS said.
All in, this puts downward pressure on SGD rates relative to USD rates. In level terms, however, we still see SGD rates tracking USD rates broadly higher over the medium term, they said.
Equities in Singapore were down 0.2%, losing some ground gained in the previous session.
The U.S. dollar dropped to a three-week low after data showed U.S. consumer prices gained slightly more than expected in March, which investors read as a transitory rise rather than a sign of an overheating economy.
Fears about accelerating inflation have supported gains in U.S. Treasury yields and the dollar this year.
The South Korean won strengthened as much as 0.7% to mark its best day in more than a week, while the Malaysian ringgit and the Philippine peso added 0.2% each.
South Korean stocks traded flat ahead of a central bank meeting on Thursday where the Bank of Korea is expected to keep its interest rates unchanged, according to a Reuters poll.
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