SINGAPORE — Singapore’s dollar is suffering its biggest losses in a year as Asia’s economic slowdown confounds local policy makers whose priority is controlling inflation, the Bloomberg news agency reported.
The Singapore dollar has weakened 3.4 per cent against its US counterpart this year and is lower against all but two of the 10 most-traded Asian currencies tracked by Bloomberg. A weaker exchange rate has the potential to add to inflation by making the cost of imported goods more expensive.
“In Asia, there’s a lot of concern about the region’s economic outlook and the Singapore dollar’s weakness is linked primarily to that,” Mr Hans Redeker, the global head of currency strategy at Morgan Stanley in London, said. The firm called the Singapore dollar “one of our key shorts” in a research report last week, referring to trades that would profit from the currency’s decline.
The Singapore dollar fell as low as S$1.27 per US dollar on May 23, its weakest level since July, before trading at S$1.259 today as of 5pm local time. Over the past 52 weeks the currency has ranged from as low as S$1.2971 in June to as strong as S$1.2152 in October.
This month’s 2.6 per cent drop is its biggest since May 2012. Singapore’s dollar has tumbled against all of its main Asian peers this year except the Japanese yen and South Korean won. It’s down 5.5 per cent versus the Thai baht.
The currency has been appreciating over the past four years, strengthening 19 per cent versus the US dollar from S$1.5582 in March 2009, and climbing against 11 of the 16 most- traded global currencies tracked by Bloomberg.
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