Strategists and experts are betting on SGD if price pressures cause the central bank to tighten the exchange-rate policy by October.
The Monetary Authority of Singapore may extend its policy tightening next month to help core inflation, which was at a 14-year high in July.
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The prediction comes at a time when all major currencies retreated against the dollar, as its rate-hike cycle continues. Although MAS has turned the Singapore dollar into a winner in Asia, it’s still down over 4% against the US dollar this 2022.
In October, MUFG Bank is set to put the likelihood of tightening by MAS at 50%, which may translate to a further gain of SGD against USD over the next few months.
“Our call of a Singapore dollar rebound is premised on most of the Fed’s eventual rate hikes already being priced into markets now,” stated Jeff Ng, a currency strategist at MUFG Bank in Singapore.
According to MUFG forecasts, SGD’s value is set to rise to S$1.38 against USD by the end of 2022. Last week, it closed at S$1.407.
Still, even if MAS pushes through with the policy tightening, it’s still not a guarantee for SGD to rally against the US dollar.
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