SINGAPORE: The Singapore dollar has hit record highs against several Asian currencies this month. This is despite currencies of energy-importing countries mostly declining amid the ongoing Middle East conflict.
At its peak on Thursday (Apr 16), S$1 could buy 13,562 Indonesian rupiah, according to data provider LSEG. That figure was less than 13,000 rupiah at the start of the year.
Similarly, S$1 was able to buy 125.34 Japanese yen on Sunday, compared with 121.93 yen per Singapore dollar on Jan 1.
The local currency also has been able to buy record amounts of South Korean won and New Taiwan dollars in recent weeks.
Last week, the Monetary Authority of Singapore (MAS) said it expected inflation to rise, and announced that it would allow the Singapore dollar to strengthen more quickly than before.
“Singapore’s imported energy costs have already risen. Prices of a wider range of imported goods and services are expected to increase in the quarters ahead,” the central bank said.
Why is the Singapore dollar strengthening?
Singapore’s reputation is one of safety and stability, and that is attractive to investors in an uncertain world.
As a result, the Singapore dollar continues to benefit from its safe-haven appeal, said Peter Chia, a senior foreign exchange strategist at UOB.
Maybank’s head of foreign exchange research Saktiandi Supaat echoed the sentiment, pointing to Singapore’s AAA credit rating and safe-haven characteristics.
He said the local currency has been relatively more resilient, and global factors such as the Middle East conflict have played a large part.
The yen has underperformed because there has been less demand for the currency as a safe haven, and Japan is a major energy importer. Other currencies are facing domestic headwinds.
“Overall, this is best seen as a broad-based resilience of Singdollar rather than weakness in any one currency,” he said.
