1 SGD = USD 0.71
Our local currency appreciated against the US dollar just 2 days ago. It went below the US$1 = S$1.40 mark – the first time in more than 4 months.
This good news did not appear out of thin air, the US dollar slipped by a fair margin following remarks by Chicago’s Federal Reserve president.
When markets closed on Monday, the Singdollar was at US$1 = S$1.3967. Early Tuesday, it went up by another basis point.
What Caused The Drastic Change
Here’s a breakdown of what went down; the US Federal Reserve had previously decided on 2 more interest rates hikes this year, which would mean slower economic growth and job creation, not to mention increased cost of borrowing.
Chicago’s Fed President went on to reinstate the rate hike stating that he foresaw more than 2 hikes. If inflation were to pick up, he said there could even be a possibility of 4, indicating a slower pace of rate hike.
This piece of forecast disappointed those who are bullish on the US dollar, and had hoped for a faster pace of interest rate hike since it will be of an advantageous position.
Due to the slower rate hike, the US dollar was on the defensive in early Asian trading on Monday, explaining the 4 month low. There will also be a lot of stop-loss selling if the dollar were to break further.
In summary, the FOREX market is very subjective and even the slightest whisperings can change the market sentiment. Fed Chair Janet Yellen is scheduled to speak at a conference this Thursday, so you can expect more news coverage on the mind-boggling effects of a hike in interest rate. Meanwhile, it will be a good time to take advantage of the US dollar because it definitely would not be a long-term thing like the Malaysia’s currency situation.
