The Australian dollar has been among the hardest hit of major currencies in recent months. Heavy losses since January have been widely reported in the financial press, with most commentaries focusing on the Aussie’s 8.6 percent decline against the US dollar to levels around 0.745; but the Australian dollar has, of course, suffered elsewhere, and a symbolic marker of its current distress arrived this week when the currency fell below parity with the Singapore dollar for the first time in nearly two years.
AUD/SGD’s fall on Wednesday to just 0.998 (as of 4pm in Sydney) reflects differences in the monetary policy outlooks of the respective central banks.
Whereas the Reserve Bank of Australia continues to see little reason for a near-term increase in interest rates, the Monetary Authority of Singapore is set to tighten monetary policy for the first time since 2012 in response to robust economic growth – 4.3 percent in the fourth quarter – which it will achieve by allowing the Singapore dollar to appreciate; it announced as much in April. The unconventional method of managing policy by managing exchange rates (in simple terms) has been employed with great success in Singapore since 1981.
Although no forecasts for AUD/SGD were available at the time of writing, the Australian dollar will, according to Goldman Sachs, continue to weaken in the broader markets. Speaking to Bloomberg nine days ago, Philip Moffitt, the head of Asia-Pacific fixed income at the illustrious bank, said that it was “hard to be bullish on the Aussie” and went on to predict a decline in AUD/USD to 0.72 by year-end (last seen at 0.7435).
HSBC has reaffirmed its US66¢ year-end forecast for the Australian dollar, thereby signalling an upcoming 8 percent slide in the world’s fifth most traded currency.
Updated: 22 Apr, 2019
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Updated: 23 Apr, 2019
What is arguably Southeast Asia’s most important exchange rate, Singapore dollar-Malaysian ringgit, leapt on Thursday to its highest level since November 2017, driven by FTSE Russell’s decision to reconsider Malaysia’s inclusion in an important bond index.
Updated: 18 Apr, 2019
The Australian dollar is forecast to climb to US$0.74 in the coming months, supported by a commodities boom that has seen the price of Australia’s largest export, iron ore, climb to a 5-year high.
Updated: 15 Apr, 2019
With the chance of a 2019 Brexit now reduced to 50 percent, the pound’s value is likely to remain capped for the time being, most likely near US$1.34, experts say. On the downside, US$1.24 is likely should the latest Article 50 extension be used to hold a UK general election.
Updated: 14 Apr, 2019