Singapore dollar at 3-month high vs USD, at record high vs Malaysian ringgit, down against Korean won in week

So far this month, the Singapore dollar is 0.5% up against the greenback, adding to the 2.7% rally in January.

Sigapore dollar
Singapore dollar Reuters

The Singaporean dollar has rallied to its strongest in more than three months against the US dollar aided by the broad weakness in the greenback and risen to a record high versus the Malaysian ringgit, thanks to the underlying weakness of the neighbour.

USD/SGD ended 1.4049 on Friday, translating to a weekly gain of 0.98% for the Sing dollar, and making it the second best in the region after the South Korean dollar which has strengthened nearly 1.8% versus the US currency.

So far this month, the Singapore dollar is 0.5% up against the greenback, adding to the 2.7% rally in January.

Major data this week from the City was the consumer price inflation and industrial output data for January. While core inflation accelerated beating market expectations to 1.5% year-on-year, Friday's industrial data showed the output fell more than expected on a month-on-month basis.

No important data points are scheduled for the next week other than the SIPMM and Nikkei PMI data for February, due on March 2.

Versus Neighbours

The Singapore dollar ended at 3.1599 on Friday against the Malaysian ringgit, a fresh record for the City's currency. So far this month, it is up 0.6% adding to the 1.4% jump in January.

Against the Indian rupee, the Singdollar rallied 0.33% this week to end at 47.437, extending the previous week's 0.56% gain, and together significantly correcting the sharp 1.5% decline posted in the week before.

The City dollar rose 0.72% on the week against the Thai baht to end at 24.8435, pushing further off the 10-month low of 24.5549 touched in the previous week. This week's gain has helped the Singapore currency to pare most of the losses suffered earlier this month, increasing the likelihood of extending January's 0.57% gain.

It was only the South Korean currency that ended higher against the Singapore unit in the week to Feb 24. SGD/KRW closed at 804.735, down 0.79% on the week, and helping the won to hit its best weekly close in ten months.

The Korean currency was the best performer among emerging currencies in the region this week, as it has surged nearly 1.8% against the greenback.

US Cues

The U.S. Treasury Secretary Steven Mnuchin on Thursday said that much work was still needed on key elements of a tax reform plan, one of the policies investors had anticipated would spur inflation and drive up U.S. interest rates.

The minutes of the latest Federal Reserve meeting, released on Wednesday, also continued to weigh down the dollar, as the details had shown that voting members did not show much urgency to tighten the credit conditions in the US.

The dollar fell more than 0.6% on Friday against the yen to 111.95, taking the USD/JPY pair to its lowest since Feb.

Financial markets across the globe are now waiting for Trump, who is scheduled to address a joint session of the lawmakers on Feb 28.