The Singapore dollar this year has established itself as Asia’s most resilient currency against the US dollar, and some strategists are betting on more strength if price pressures force the nation’s central bank to tighten its exchange-rate policy again next month.
Goldman Sachs Group Inc, Citigroup Inc and MUFG Bank Ltd are among banks that are bullish on the currency, underpinned by an expectation that the Monetary Authority of Singapore (MAS) could extend policy tightening at its October meeting to help rein in core inflation, which hit a 14-year high in July.
The predictions come as almost every major currency retreats against the dollar, with the US Federal Reserve set on an aggressive rate-hike cycle. While the MAS has turned the nation’s currency into a winner against peers in Asia, it is still down more than 4 percent against the US dollar this year.
Photo: Reuters
MUFG Bank puts the likelihood of additional tightening by the MAS next month at 50 percent, which could translate into a gain of more than 1 percent for the local currency versus the US dollar over the following months, according to Jeff Ng, a currency strategist at MUFG Bank in Singapore.
“Our call of a Singapore dollar rebound is premised on most of the Fed’s eventual rate hikes already being priced into markets now,” he said.
MUFG forecasts the Asian currency rising to S$1.38 against the US dollar by the end of this year. It closed last week at S$1.407.
Unlike most central banks that use interest rates to guide policy, the MAS responds to rising core inflation by guiding the local dollar higher against a basket made up of the currencies of its major trading partners. The central bank focuses on the level of the Singapore dollar’s nominal effective exchange rate, which it allows to move within a policy band.
Still, even if the MAS does extend its policy tightening for a fourth time this year, there is no guarantee that the local currency would rally against the US dollar. The Singapore dollar earlier this month slumped to its lowest level in more than two years, before paring this year’s decline to 4.1 percent by the end of last week.
“Despite the MAS tightening, USD/SGD has continued to inch higher amidst a broad USD rally supported by a hawkish Fed, geopolitical tensions and a slowdown in China’s growth,” Divya Devesh, head of ASEAN and South-Asia FX research at Standard Chartered Bank SG Ltd in Singapore, wrote in a note yesterday.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last