Singapore dollar comes off eight-week high as investors take profit

A woman holds a stack of $50 Singapore dollars. The Singapore dollar turned lower on Monday as investors took profits after the currency rose to a near eight-week top, while the Malaysian ringgit gained on catch-up buying after holidays. -- NP FILE P
A woman holds a stack of $50 Singapore dollars. The Singapore dollar turned lower on Monday as investors took profits after the currency rose to a near eight-week top, while the Malaysian ringgit gained on catch-up buying after holidays. -- NP FILE PHOTO: KUA CHEE SIONG

REUTERS - The Singapore dollar turned lower on Monday as investors took profits after the currency rose to a near eight-week top, while the Malaysian ringgit gained on catch-up buying after holidays.

The city-state currency firmed to 1.2560 versus the United States dollar earlier in the session, its strongest since June 19, on data showing Singapore's economy expanded at a better-than-expected pace in the second quarter.

But the Singapore dollar, last week's best-performing emerging Asian currency with a 1.2 per cent rise against the greenback, failed to hold on to its gains as profit taking kicked in. Investors also reduced long positions in the currency against the neighbouring ringgit.

"Investors still appeared to hold short US dollar/Singapore dollar positions," said a European bank trader in Singapore. "It still looks attractive to add such positions more here, but it is hard to find factors to break support around 1.2540-50 for now."

Last week, the city-state currency led gains among emerging Asian currencies with local financial markets closed for holidays on Thursday and Friday.

Regional currencies advanced as upbeat data from China offered some hope that the world's No.2 economy might be stabilising after more than two years of slowing growth.

"With implicit signs of stabilisation in the Chinese economy, Asian currencies may continue to find respite from the dollar in the near term," OCBC Bank said in a note to clients.

The ringgit rose on post-holiday buying as investors caught up with strong China trade and factory data released last week while they were away on holiday.

But the Malaysian currency gave up some of its earlier gains as interbank speculators sold it around 3.2300 to the dollar with the session high of 3.2290, traders said.

A senior Malaysian bank trader in Kuala Lumpur said the ringgit needs to strengthen past 3.2200 for further appreciation. Once the level is broken, the ringgit is expected to try and break through 3.2000, the trader added.