Serious Singdollar hits another record high against ringgit at 3.1687, PAP best!

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Singdollar hits another record high against ringgit at 3.1687

Updated: 11:11 PM, February 24, 2017


SINGAPORE — The Singapore dollar climbed to an all-time high against the Malaysian ringgit on Friday (Feb 24), helped by weakness in the US dollar and waning expectations that the Monetary Authority of Singapore (MAS) will ease policy in the near term.

The local currency hit an intraday record of 3.1687 ringgit about midday, before closing the Asian session at 3.1630, a 0.5 per cent gain on the day, showed Bloomberg data. It has risen 2.1 per cent against the Malaysian currency this year.

Against the greenback, the Singapore dollar rose 0.2 per cent to S$1.4038 after strengthening to S$1.4023 during the Asian session, its highest since November. The Singapore dollar has risen 2.9 per cent against its US counterpart this year.

Uncertainty over details of the Trump administration’s tax reform plan weighed on the US dollar, after US Treasury Secretary Steven Mnuchin offered few details in his first televised interview since taking office. He told Fox Business Network on Thursday that any policy steps the Trump administration takes would likely have a limited impact this year and said on CNBC that he wanted to see tax reforms passed before Congress’ August recess.

Mr Mnuchin’s comments left analysts wondering whether details of the tax reform plan would be unveiled when President Donald Trump addresses a joint session of Congress on Feb 28.

“The expectation is that Mr Trump will at least provide some more details on the tax cuts and that’s supposed to strengthen the US dollar and make yields rise,” said Mr Sean Yokota, head of Asia strategy for Scandinavian bank SEB in Singapore.

“So what he’s (Mr Mnuchin) saying is clearly setting expectations lower going into it,” said Mr Yokota. More details of the tax plans could still emerge in the next few days, however, and trigger fluctuations in currencies, he added.

The US dollar also failed to shrug off pressure from the Federal Reserve’s minutes released on Wednesday, which were more dovish than some had expected.

“Market participants were still digesting the Federal Open Market Committee’s minutes from the January meeting, and there seems to be two different camps in the reading of those minutes — whether they introduced a more hawkish tone, or a more dovish tone. It appears the doves are winning that battle,” said Mr Bill Northey, chief investment officer for the private client group at US Bank.

On the home front, the rise in consumer prices in January, together with much better-than-expected economic growth in the fourth quarter of last year as well as the Government’s generous Budget measures for this year make it less likely that the central bank will ease policy in the near term, said analysts.

“Given that Budget 2017 was expansionary and growth and inflation are actually evolving in line with the Monetary Authority of Singapore’s expectations, I think this reduces the odds of any shift in policy at the April meeting,” said ANZ economist Ng Weiwen.

Given its heavy reliance on trade, Singapore targets the exchange rate instead of interest rates to maintain price stability.

The MAS last eased policy in April 2016, guiding the Singapore dollar to a neutral stance against the currencies of its major trading partners. WITH AGENCIES


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