SINGAPORE - The three-month Singapore interbank offered rate (Sibor), which is used to set interest rates on mortgages, spiked up to a five-month high of 0.9960 per cent after the Singapore dollar slumped to a fresh five-year low against the US dollar.
The rate closed at 0.93825 on Friday.
Since January, the three-month Sibor has more than doubled. It touched its highest level of 1.02705 per cent on April 9.
Sibor is likely to face further upward pressure as regional currencies continue to tumble against the greenback, in the wake of the devaluation of the yuan.
A softer Singapore dollar can put upward pressure on local interest rates as investors seek higher yields as compensation for holding the weakening currency.
The Singdollar fell to as low as 1.4128 against the US dollar on Monday (Aug 24) morning, the lowest level for the currency since June 2010.
Another key local interest rate, the three-month Swap Offer Rate (SOR) - typically used to price corporate loans - spiked to a year high of 1.20457 per cent on Friday from 1.12982 per cent on Thursday. It is up more than 60 per cent from Jan 2.