File photo of Sing dollar notes. (Photo: Goh Chiew Tong)
SINGAPORE: The Singapore dollar hit a more than one-year-high against the US dollar on Friday (Sep 8), tracking the rise in other Asian currencies as the beleaguered greenback continued its losing streak.
The Sing dollar last traded at 1.3371 against the US currency, up 0.2 per cent to hit its highest since April 2016. Year to date, the local dollar has defied expectations with gains of more than 7 per cent against the US dollar.
Other Asian currencies also gained ground against a weakened greenback, with the Australian dollar touching its highest peaks since May 2015 and the Japanese yen strengthening below the 108 level.
Within Southeast Asia, the Indonesian rupiah and the Malaysian ringgit stood at near 10-month highs after rising 0.9 and 0.4 per cent, respectively. According to Maybank analysts, the ringgit could be seeing a gradual return of stability as “political (and) contingent liability risk subsides, fiscal consolidation gains traction, oil prices continue to stabilize and uncertainty subsides".
For the US dollar, a confluence of worries such as lingering geopolitical tensions on the Korean peninsula, has kept it on the back foot.
The dollar index against a basket of six major currencies on Friday was last seen 0.5 per cent lower at 91.230, and was on track for a near 2 per cent weekly loss.
Analysts said risk aversion accelerated as markets braced for North Korea’s celebration of its founding day on Saturday, which may lead to a re-escalation in geopolitical tensions.
“There is talk that North Korea may conduct another nuclear test on Sep 9, its Founder’s Day,” DBS said in a note. “While China signalled support for more measures by the United Nation Security Council to pressure North Korea to the negotiation table, the gap remains with the US on how tough these measures should be.”
Comments from New York Fed President William Dudley on how the US central bank can continue to raise interest rates gradually also weighed on the dollar. Most analysts noted that the top Federal Reserve official sounded less hawkish than usual, with Mizuho Bank’s forex strategist Chang Wei Liang describing the comments as a “marked departure” from Dudley’s usual comments of another rate hike this year.
A surge in US jobless claims and worries about the impact of hurricanes Irma and Harvey on the world’s largest economy also kept markets doubting that the Fed could make its next tightening move anytime soon, and stoked demand for safe-haven government debt.