Singapore dollar stays weak day after MAS eases monetary policy

The Singapore dollar continued to weaken against the US dollar on Jan 29 morning following the Monetary Authority of Singapore's (MAS) surprise easing of its monetary policy on Wednesday. -- PHOTO: AFP
The Singapore dollar continued to weaken against the US dollar on Jan 29 morning following the Monetary Authority of Singapore's (MAS) surprise easing of its monetary policy on Wednesday. -- PHOTO: AFP

SINGAPORE - The Singapore dollar continued to stay in its weakened state against the US dollar on Thursday following the Monetary Authority of Singapore's (MAS) surprise easing of its monetary policy on Wednesday to slow the appreciation of the local currency.

The move came as MAS slashed its inflation forecast for 2015 to -0.5 per cent to 0.5 per cent, down from the 0.5 per cent to 1.5 per cent it had expected in October, mainly because of falling oil prices

The Sing dollar recovered some ground and was trading at 1.3506 to the US dollar at 3.37 pm, up from its close on Wednesday of 1.3512. The currency was trading at around 1.3426 against the greenback before MAS announced its policy shift.

It touched $1.3569 on Wednesday, its lowest since Feb 5 2010 when it sank to 1.4230.

Mr Heng Koon How, senior FX strategist, Asia Pacific, Credit Suisse Private Banking & Wealth Management, in a note on Wednesday, said he sees the Sing dollar at 1.37 to the greenback in three months and at 1.39 in a year.

"Going forward, USD/SGD is likely to be driven more by US monetary policy normalization. In this regard, we expect the US Federal Reserve to make its first rate hike around the second half this year, and see more broadening USD strength going forward," he said.

"As the currencies of some of Singapore's trading partners have declined significantly recently (e.g. Malaysian ringgit, euro and Japanese yen) and is expected to weaken further, valuation will likely stay stretched and the Singapore dollar will have to weaken further versus the US dollar," he said.