The Singapore dollar rose against the greenback yesterday to hit its highest level against the American currency since June 2016.
The 0.3 per cent increase took the Singdollar to US$1.333, and it was one of many currencies in the region to start the new year on an upward trajectory.
Its impetus here came from expectations that the Monetary Authority of Singapore could tighten monetary policy as early as April in the light of a recovery in the service sector. That sent the currency higher, with foreign exchange dealers dismissing a fourth-quarter slowdown in growth due to factories losing a bit of steam.
"We remain sanguine on the 2018 growth outlook for now, but watch for potential policy tightening risks," OCBC Bank said in a research note.
Elsewhere, regional currencies made a strong start to the new year as sentiment was boosted by gains in the euro, while a weaker US dollar prompted further interest in Asia.
The greenback's decline last year was its biggest in more than a decade and was fuelled by doubts over the durability of a pickup in United States economic growth following a sweeping tax overhaul.
Taiwan's dollar was the biggest percentage gainer yesterday, rising 0.8 per cent against the US dollar to a more than four-year high.
"It hit a similar level last Friday but pared gains to close flat... What we're seeing today is just a rebound, which is not a surprise," said Mr Gao Qi, who is Asia forex strategist at Scotiabank.
The yuan was also firmer, gaining 0.1 per cent to a near four-month high against the greenback. Growth in China's manufacturing sector unexpectedly picked up to a four-month high last month, a private business survey showed, highlighting unexpected resilience in the world's second-largest economy.
The South Korean won was also stronger against the US dollar, edging up after North Korean leader Kim Jong Un offered an olive branch to Seoul, saying he was open to dialogue. Increased tensions on the Korean peninsula had served as a major detriment to the won.
The Philippine peso and the Thai baht did not trade as markets were closed for the New Year celebrations.
REUTERS
