The Singapore dollar fell, while most Asian currencies and shares rose after the city-state’s central bank unexpectedly left its monetary policy settings unchanged, raising hopes that the likely next US rate hikes would be the last this cycle.
The Singapore dollar weakened 0.2 percent, hitting its lowest since Feb. 9.
However, currencies across the region trended higher, with the Malaysian ringgit posting its fifth consecutive weekly gain, as the US dollar tumbled to a one-year low.
The Monetary Authority of Singapore (MAS) for the first time since April 2021 left its monetary policy unchanged, joining central banks in India, Canada, South Korea and Australia in standing pat as fresh concerns about global growth overshadowed worries about persistently high inflation.
“We anticipate a neutral-to-dovish stance from the MAS — if downside risks escalate, the MAS may loosen by reducing the pace of SGD appreciation through the slope,” said Jeff Ng, a senior currency analyst at MUFG Bank.
The central bank at the helm of one of the world’s most open economies pointed to multiple problems, including higher global borrowing costs and fragilities in the global financial system.
Benchmark 10-year yields rose 2.5 basis points (bps) to 2.772 percent, as Singapore’s economy grew slower than expected in the first quarter.
Core inflation pressures for the city are likely to moderate in second half of fiscal 2023, Goldman Sachs said in a note.
The Indonesian rupiah led the gains among Southeast Asian currencies, climbing 0.6 percent and posting its best weekly jump since Jan. 13.
A Reuters poll found that Bank Indonesia is expected to keep its key interest rate unchanged at 5.75 percent on April 18 for a third consecutive meeting and for the rest of this year. – Reuters
