Us Dollar To Singapore Dollar

Latest News Update About Us Dollar To Singapore Dollar: The US dollar tumbled against a wide range of currencies today, hit by continued weakness ahead of expected easing by the Federal Reserve, and quickly accelerated by a surprise decision by the Monetary Authority of Singapore to tighten its monetary policy, reports MarketWatch.At a semi-annual meeting this morning, the Singapore central bank surprised many economists by effectively tightening its policy with an increase in slope of its Singapore dollar NEER band, at the same time maintaining its policy of modest and gradual appreciation of the Singapore dollar.

The result was immediate with the U.S. dollar falling sharply against its Singapore counterpart, dropping quickly below the key levels of S$1.30 and S$1.29, before finding initial support at S$1.2896, an all-time low.

Reuters adds:

Singapore's decision to allow its currency to strengthen came as the government reported a record contraction in the export-reliant economy during the third quarter, when GDP fell 19.8 per cent on a seasonally adjusted annualised basis. (See previous post.)

Third-quarter GDP was 10.3 per cent higher than a year ago, the advance data showed, and the government maintained its projection that 2010 growth would be between 13 per cent and 15 per cent following a strong first half.

Despite the dire third-quarter economic contraction, the Monetary Authority of Singapore said "the balance of risks is weighted towards inflation going forward." It also indicated its policy response was a reaction to the global currency tensions, an issue that dominated a weekend meeting of the International Monetary Fund in Washington and which is set to also dominate meetings of the G20 this month and in November.

"The policy band will at the same time be widened slightly in view of the volatility across international financial markets," MAS said in a statement.

Record low interest rates and weak growth in developed countries have pushed global investors into emerging markets in search of higher yields, driving up their currencies and asset prices.

In response, several governments have intervened to stop their currencies rising too quickly or put measures in place, such as taxes, to curb the capital flows, raising concerns that uncoordinated actions could stunt a world economic recovery.

Singapore has also been hit by the inflows. The stock market has rallied more than 11 per cent this year and in the first few minutes of trade on Thursday, rose 0.5 per cent.