This article first appeared in The Edge Financial Daily on February 6, 2020

KUALA LUMPUR: The Singapore dollar yesterday fell below the RM3 mark for the first time in about a year after the republic’s central bank said there was sufficient room for the Singapore currency to ease as the Wuhan virus hits the economy.

The Singapore dollar dropped to an intraday low of RM2.9788 — the lowest since Aug 14, 2018 when it traded at 2.9809 — before rising to close the day at 2.9854.

Year to date, the ringgit has appreciated about 1.83% against the Singapore dollar.

The Singapore dollar also headed south against the US dollar yesterday. Bloomberg reported that it dropped as much as 0.9% to S$1.3824 against the  greenback, the lowest since Oct 10 last year.  

The Singapore dollar was the worst-performing currency in Asia yesterday, the report said.

The Monetary Authority of Singapore (MAS) said in a statement that there is sufficient room within its monetary policy band to accommodate an easing of the Singapore dollar exchange rate in line with any weakness in the economy arising from the Wuhan virus outbreak.

The MAS uses the Singapore dollar nominal effective exchange rate scheme to manage the currency’s rate against a basket of world currencies.

It lets the Singapore dollar rise or fall against the other currencies within an undisclosed policy band.

The central bank said the Singapore dollar “has been fluctuating near the upper bound of the policy band” since it eased monetary policy last October for the first time since 2016.

“There is, therefore, sufficient room in the band for the Singapore dollar to ease in line with any weakness in the Singapore economy in the coming months,” it added.

The MAS maintained its policy during yesterday’s review. The next policy review will be held in April.