Singapore dollar trades at 10-year high against the US dollar

The Monetary Authority of Singapore (MAS) is expected to keep a tight policy setting relative to the U.S. Federal Reserve in the near term, enticing investors seeking higher yield. The Singapore dollar now ranks as the third-best performer this year among its Asian peers, after the Malaysian ringgit and the Thai baht.

As of Sept. 27, the Singaporean currency had been up 3% this year, at around 1.281 against the greenback. The gain began around August in anticipation of a potential rate cut in the U.S. and gathered pace after the Federal Reserve kick-started its rate-cut cycle on Sept. 18.

In August, the Singaporean government raised its growth forecast for the whole year to 2-3% from 1-3% in previous prediction.

The stronger Singpore dollar is also a result of a tighter monetary policy by the MAS to fight inflation in the aftermath of the pandemic. The MAS tightened its monetary policy five times within the span of one year from October 2021 and has maintained an appreciating bias for the currency at its most recent meeting in July to rein in prices.