Singdollar going strong against regional currencies

This story was first published in The Straits Times on Dec 17, 2013

LOCAL holiday-makers have reason to cheer with the Singapore dollar now stronger against most regional currencies, thanks to the Republic's status as an Asian safe haven.

The Singdollar is higher this year against the Malaysian ringgit, Indonesian rupiah, Thai baht and Australian dollar so Singaporeans will get more bang for their buck when they travel to these places.

Much of the gains have come since the start of last month, as cash flowed out of the region to the United States in anticipation of a slowdown of the huge money-printing programme there.

Since Singapore has stronger trade figures than many of its neighbours, it has been less badly hit by this cash exodus.

"The Singdollar has actually been stabilising for the past few years - it's just that global movements are causing this volatility," said Mr Wu Mingze, a market analyst at forex trading firm Oanda.

"The Monetary Authority of Singapore has managed to keep the Singdollar on a slight appreciation path."

The Singapore dollar has risen 7.3 per cent against the ringgit since the start of the year, including a 1.1 per cent gain since Oct31. The money-market rate was S$1 to RM2.5775 yesterday, although banks and money-changers will offer less favourable rates.

Thailand's currency has been hit by the political upheaval there but is supported by the kingdom's healthy trade numbers. The baht has lost 1.5 per cent against the Singdollar since Oct 31, to yesterday's 25.4996 baht to S$1.

Another significant gain has been against the Aussie dollar - 12.8 per cent since the start of the year, and 4.9 per cent since Oct 31, to yesterday's S$1 to 88.95 Australian cents.

Reasons include the weak outlook for the mining industry Down Under, noted Mr Wu. The commodities boom had been largely responsible for the rise of the Aussie dollar in recent years.

One of the many travellers to benefit from the Singdollar's strength is logistics executive Claire Ban, who was in Indonesia earlier this month on business.

"It's great that the Singdollar is stronger, and I got better bang for my buck on meals," said the 29-year-old.

The Singdollar has gained 5.9 per cent against the rupiah since Oct 31, to yesterday's S$1 to 9,636.97 rupiah. The gain this year is 22.1 per cent.

But it is not all good news, especially for travellers heading farther afield. The Singapore dollar is down against both the US dollar and euro.

"The recent 'tapering' fears are driving the US dollar stronger," said Mr Wu. "There has been an outflow of funds from the region, into the US."

"Tapering" refers to the expected reduction in the United States Federal Reserve's US$85 billion per month worth of bond purchases, which is the modern equivalent of money-printing.

This programme, intended to stimulate the US economy, has driven down the greenback owing to the billions of dollars of new currency flooding the globe. A cutback in this scheme will thus strengthen the US dollar.

This story was first published in The Straits Times on Dec 17, 2013

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