Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Singapore Dollar Powers to Six-Month High on Fiscal Stimulus

ForexAug 23, 2020 08:27PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. Singapore Dollar Powers to Six-Month High on Fiscal Stimulus

(Bloomberg) --

Singapore’s large pool of fiscal reserves is proving to be a boon for the nation’s currency.

The city state’s dollar advanced to its highest level in six months last week -- erasing its pandemic-driven losses -- after the government unveiled another stimulus package, financed in part by unused expenditure from earlier budgets.

With the total for pledged pandemic aid now over S$100 billion ($73 billion), there could be more gains to come as the spending eases pressure on the Monetary Authority of Singapore to lower the currency band it uses to manage inflation.

“The ability to dig deep into fiscal reserves from years of surplus is unequivocally an advantage,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore. He sees the local dollar strengthening beyond 1.36 versus the greenback, from $1.3718 at 7:30 a.m. local time on Monday.

Analysts at Malayan Banking Bhd. forecast the currency to head toward 1.35 while options contracts signal an almost even chance that the Singapore dollar will finish the year stronger than this level.

Singapore’s fiscal buffer is in marked contrast to the situation in many other developed economies, which have relied on increased debt and rate cuts by central banks to fund stimulus.

The MAS, which has two scheduled policy decisions a year, took unprecedented action in March of lowering the midpoint of the currency band and reducing its slope to zero. Deputy Managing Director Edward Robinson said this month that the monetary response remained appropriate.

With central bank’s next scheduled policy decision is not due until October, the immediate focus of the market will be the next round of economic data from Singapore and the broad direction of the greenback.

Mizuho’s Varathan said his current forecast for Singapore;s currency may be conservative, given the “bearish USD impulse” in markets.

Figures due Monday are projected to show core consumer prices fell 0.4% in July from a year ago, versus a drop of 0.2% a month earlier.

Industrial production numbers on Wednesday may paint a more upbeat picture, with output estimated to rebound 4.0% in July from June, while still down 6.4% from a year earlier.

Below are the key Asian economic data and events due this week:

©2020 Bloomberg L.P.

Singapore Dollar Powers to Six-Month High on Fiscal Stimulus

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email