US dollar hits S$1.39 and may keep rising
CONCERNS that US interest rates may rise sooner than expected have propelled the greenback to multi-year highs against a raft of currencies, including the Singapore dollar.
The prospect of an interest rate hike - some forecasters are tipping by June, others as early as next month - has sparked a rush for US dollars and US dollar-denominated securities.
That in turn sent the greenback soaring yesterday.
The Singdollar was trading at $1.3872 against the US dollar last night - its weakest since May 25, 2010, when it hit $1.4185. The greenback has climbed 1.3 per cent since last Thursday and has surged 12 per cent from the 12-month low of $1.2381 on July 23 last year.
The Singdollar was trading at $1.3872 against the US dollar last night - its weakest since May 25, 2010, when it hit $1.4185. The greenback has climbed 1.3 per cent since last Thursday and has surged 12 per cent from the 12-month low of $1.2381 on July 23 last year.
There were similar movements against other regional currencies as the prospect of rising US yields threatens to sap funds from emerging markets. Mizuho Bank said weak Chinese import data also fuelled yesterday's sell-off in Asian currencies, with commodity-linked Indonesian rupiah and Malaysian ringgit among the worst hit.
The US dollar hit 3.7085 against the ringgit yesterday, its highest since March 2009, while one US dollar was worth 13,230 Indonesian rupiah, a 17-year high. The dollar reached 121.42 on the yen, while the euro fell to 1.0743.
The greenback's surge began in earnest after a stellar employment report on Friday said 295,000 jobs were added in the US last month, which sparked hawkish comments from Fed policymakers pointing to an early interest rate rise. Federal Reserve Bank of Dallas president Richard Fisher argued for an earlier hike to avoid overly steep increases later.
Analysts are revising their estimates. "Our initial estimates were for the Singdollar to drop to $1.42-$1.45 by year end.
But at the rate things are going, we could hit $1.50 by year end," Phillip Futures investment analyst Howie Lee said. "The US dollar is like a cargo-laden automotive that cannot stop."
But at the rate things are going, we could hit $1.50 by year end," Phillip Futures investment analyst Howie Lee said. "The US dollar is like a cargo-laden automotive that cannot stop."
The Straits Times / Top of The News Published on 12 March, 2015
By Grace Leong gleong@sph.com.sg
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