The Singapore dollar clawed back early losses on Wednedsay as dealers trimmed positions ahead of a central bank meeting on Thursday at which the Monetary Authority of Singapore is expected to tigthen policy further. The MAS' decision is expected to set the tone in emerging Asian currencies as it may provide clues on the regional central banks' stance on inflation, analysts said.
The Singapore dollar along with other emerging Asian currencies has been strengthening in the past several weeks on expectations for tighter policy and continued capital inflows. The MAS, which controls monetary policy via the Singapore dollar exchange rate, will either sanction a small, immediate jump in the local dollar or signal it will let the currency rise at a faster pace over time, a Reuters poll showed.
At 0640 GMT, the Singapore dollar was at 1.2556, marginally higher on the day. Some market watchers expect the MAS to keep policy unchanged and said that would reduce appetite for the Singapore dollar. Asian currencies could rise broadly if MAS were to tighten policy, Rob Ryan, FX strategist at BNP Paribas in Singapore said. The won rose about 1 percent against the yen as offshore players sold the Japanese currency, anticipating an end to its short-covering rally.
The South Korean currency also turned higher against the dollar as settlement demand from exporters, including shipbuilders, prompted stop-loss dollar sales. The peso also slipped as investors covered dollar-short positions. But the Philippine currency found some support around 43.30 per dollar, the 61.8 pct Fibonacci retracement level of its November-January weakening trend, and 43.35, session low of Tuesday. Players were building up fresh short positions above 43.30, dealers said.
Comments
Comments are closed.