Thursday 28 Mar 2024
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KUALA LUMPUR (Oct 18): The ringgit declined further against the Singaporean dollar to a new record low of 3.3277 on Tuesday (Oct 18) as the Singaporean currency continued to be supported by the recent tightening of monetary policy in the city-state.

The local note pared losses to close at 3.3176, after having fallen to 3.3277. Year-to-date, the local note has depreciated 6.44% against the Singaporean dollar.

On Oct 14, the Monetary Authority of Singapore (MAS) tightened its monetary policy for the fourth time this year, saying it was  needed to further reduce imported inflation and help curb domestic cost pressures.

MAS said it would re-centre the midpoint of the Singaporean dollar's nominal exchange rate policy band up to its prevailing level. "There will be no change to the slope and width of the band," it said in a statement.

Meanwhile, the ringgit appreciated 0.03% to 4.7155 against the US dollar on Tuesday, from its previous close of 4.7168.

Other Asian currencies also appreciated against the greenback, with the Singaporean dollar rising 0.06%, Thai baht rising 0.04%, and the Indonesian rupiah appreciating 0.16%.

However, year-to-date, the ringgit has fallen 12.48% versus the US dollar as investors flock to the safe-haven currency amid the uncertainties brought about by geopolitical tensions and the weaker global economic outlook.

The hawkish US Federal Reserve (Fed) has already increased its funds rate by 300 basis points (bps) to the current 3%-3.25% in its mission to tame inflation.

As inflation remained higher than expected in the US — clocking a consumer price index of 8.2% in September, hotter than the expected 8.1% consensus forecast — the Fed is likely to respond with an aggressive rate hike in its penultimate Federal Open Market Committee meeting on Nov 1 and 2.

This lines up with consensus estimates, as according to Bloomberg, economists peg a 75 bps hike in November to an upper bound rate of 4%, and a subsequent 50 bps hike in December's meeting for an end-2022 forecast of 4.5%.

Edited ByS Kanagaraju
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