Singapore dollar hits 5-year low of 1.4150 to US dollar after China weakens yuan again

A money changer counting Singapore dollars in Raffles Place.
A money changer counting Singapore dollars in Raffles Place. PHOTO: ST FILE

SINGAPORE (REUTERS, AFP) - The Singapore dollar hit a fresh five-year low on Wednesday (Aug 12) as China's central bank devalued its currency for the second day in a row.

The Singdollar fell nearly 1 per cent to 1.4150 per US dollar, its weakest since June 2010.

China cut the value of the yuan against the US dollar by 1.62 per cent on Wednesday, the official Xinhua news agency said, the second reduction in two days. The daily fix that sets the value of the Chinese currency against the greenback was lowered to 6.3306 yuan, from 6.2298 on Tuesday, Xinhua quoted national foreign exchange market data as showing. It is the weakest guidance rate for the currency since October 2012.

The yuan fell to as low as 6.4301 per US dollar, the weakest since August 2011, mauling Asian currencies.

Malaysia's ringgit sank to a fresh 17-year low of 3.9975 against the US dollar, the lowest since 1998. South Korea's won declined 0.8 per cent to 1,188.88 against the US dollar and Taiwan's dollar slid 0.3 per cent to NT$32.17. Indonesia's rupiah dropped 1.9 per cent to 13,776 against the US dollar, while the Philippine peso dropped 0.5 per cent to 46.17.

Singapore's dollar closely tracks the yuan as traders and analysts believe it is included in the undisclosed currency basket used by the Monetary Authority of Singapore to manage monetary policy.

MAS said on Wednesday that the Singapore dollar remains within its policy band despite the recent volatility in foreign exchange markets. It said that it stands ready to prevent excessive volatility in the Singapore dollar.

The devaluation in the yuan's midpoint on Wednesday following a 1.8 per cent depreciation on Tuesday is based on analysis of fresh economic data and improved quotation mechanism, China's central bank said in a statement posted on its website.

But it added that there was no basis for a sustained depreciation in the yuan given global and domestic economic conditions.