Most Asian currencies gained against the dollar on Tuesday, with the Singapore dollar hitting a 10-year peak amid expectations that rising inflation may persuade the authorities to tolerate faster appreciation.
The Singapore dollar rose as far as 1.5040 per dollar, up a fifth of a percent from late Asia trade on Monday and its strongest level since early September, 1997. ?A lot of people want to sell (the U.S. dollar),? said a trader in Singapore. “Look at the CPI figure yesterday, which was much stronger than people had expected, they (the authorities) must continue the policy of a strong Singapore dollar,” she said.
Singapore’s consumer prices rose a seasonally adjusted 0.3 percent in June from May, government data showed on Monday, and climbed 1.3 percent from a year earlier, hitting a one-year high.
Singapore’s central bank uses the currency as its main monetary policy tool by guiding it in an undisclosed trading band against a basket of currencies.
The Singapore dollar has gained 1.9 percent so far this year versus the dollar, trailing in Asia behind the Indian rupee , the Philippine peso and the Thai baht Solid economic fundamentals and a modest tightening monetary policy will continue to support the currency, analysts say.
?We would continue to focus trading recommendations on more conservative currencies such as long Singapore dollar, where macro policy and economic data continue to point to the need for further FX appreciation,? JPMorgan analysts said in a note. The Thai baht edged up on both onshore and offshore markets, shrugging off the government’s rules aimed at relaxing dollar holdings and spurring capital outflows to help rein in the baht. The baht rose to 33.58 per dollar onshore from around 33.62 before the Thai authorities announced the new rules, while the currency crept up to 29.7 offshore . Most Asian currencies were stronger against the dollar, which slipped to a two-month low against the Japanese yen and stuck near a record low versus the euro .
?Agencies