THE Singapore dollar on Wednesday fell to its lowest in a year on concern weakening growth in the global economy will prolong the island-state's recession, Bloomberg news report.
The currency declined for a second day as the benchmark Straits Times Index slid 4.1 per cent on Wednesday, bringing losses this year to 46.8 per cent. The Singapore dollar was the second-worst performer today among the 10 most-active currencies in Asia outside Japan.
Euro, pound pummelled by recession fears
LONDON - FEARS of a European recession hammered the euro and the British pound on Wednesday as traders bet on further interest rate cuts in the region to try to stave off a prolonged downturn.
The euro fell to the lowest level for almost two years against the dollar, while the British pound plunged to a five-year trough after Bank of England governor Mervyn King warned that Britain was likely entering a recession.
'There's a lot of fear about the slowdown that is coming this year and next,' said Mr Ho Woei Chen, an economist at United Overseas Bank, Singapore's second-largest bank. 'The Singapore dollar is taking its cue from the weakening of Asian currencies.'
Singapore's currency fell as much as 1.3 per cent to S$1.4998 against the US dollar, the lowest since September 2007, before trading at S$1.4987 as of 4 p.m. local time, according to data compiled by Bloomberg. The local dollar will decline to S$1.50 by the end of the year, Mr Ho said.
The MSCI Asia-Pacific Index of regional shares dropped 5.5 per cent after the Standard & Poor's 500 Index fell 3.1 per cent yesterday.
The Monetary Authority of Singapore on Oct 10 ended a policy favoring gains in the currency for the first time since 2003 after a government report showed the city-state fell into its first recession since 2002.
