DBS cuts Sing$ forecast

The Singdollar has weakened by about 3.5 per cent against the US currency since the end of  2017 when it traded at 1.3358 to the US dollar.
The Singdollar has weakened by about 3.5 per cent against the US currency since the end of 2017 when it traded at 1.3358 to the US dollar.PHOTO: REUTERS

DBS Group Research downgraded its Singapore dollar forecast last Friday, with its analysts saying the currency was "too strong" relative to external and domestic factors.

Forex strategist Philip Wee and economist Radhika Rao now believe the United States dollar will rise to 1.40 to the Singdollar by the end of this year and stay above that level into 2019.

They said the US dollar is strong against currencies in the developed and emerging markets, thanks to factors such as rising interest rates.

Currencies such as the Thai baht and South Korean won have weakened this year due to trade tensions between the US and China.

The analysts pointed out that consumer price index inflation in Singapore is within this year's forecast range of zero to 1 per cent, while there are no signs that core inflation will exceed the 1 to 2 per cent forecast range anytime soon.

A version of this article appeared in the print edition of The Straits Times on October 31, 2018, with the headline 'DBS cuts Sing$ forecast'. Print Edition | Subscribe