Monday, November 17

S'pore dollar at 14-mth low

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Nov 17, 2008
S'pore dollar at 14-mth low

TAIPEI - THE Singapore dollar fell to a 14-month low against the US dollar on Monday as data showing a sharp fall in the island's exports underscored the toll the global economic downturn is exerting on emerging Asia.
The Indonesian rupiah fell 2 per cent and other Asian currencies also fell after a meeting of leaders of the Group of 20 nations failed to yield any substantial measures and data showed the euro zone and Japan toppled into recessions.

The Singapore dollar fell to as low as 1.5253 to the US dollar, its weakest level since September 2007, with the market expecting the Monetary Authority of Singapore to adopt a looser monetary policy to keep the manufacturing sector competitive.

One of the region's most trade-dependent economies, Singapore released data showing a sharper-than-expected decline in October exports.

'Following the more aggressive policy moves elsewhere and the weaker-than-expected economic outturns globally since the October meeting, it now seems more unobjectionable for the MAS to ease their monetary policy (via weaker currency),' UBS said in a report.

Singapore runs monetary policy by guiding the trade-weighted exchange rate. In October, it already eased policy by switching to a zero appreciation path for the trade-weighted currency band.

The monetary authority schedules policy reviews twice a year - April and October - but traders expect it to loosen policy before its next scheduled meeting.

Central banks from India to Taiwan have slashed their main policy interest rates over the past month as the global financial crisis hit exports and broader growth. Economic woes and capital outflows have been pushing currencies from emerging Asia lower over the past few months.

On Monday, the Indonesia rupiah led the fall in the region's currencies by weakening by about 2 per cent to trade at 11,750 to the US dollar, while the South Korean won lost 0.6 per cent to 1,407.4.

Group of 20 leaders meeting over the weekend also failed to convince markets that key economies were doing enough to ward off a global recession.

'There were no measures, so there was nothing for the markets to grip on to,' said Vishnu Varathan, an economist from Forecast, adding that the market took its cues from the fall in US stocks. -- AP
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