“We maintain an upward bias for Singapore dollar interest rates on a multi-month horizon,” said Frances Cheung, head of foreign-exchange and rates strategy at Oversea-Chinese Banking Corporation (OCBC) in Singapore.
Traders are betting that Singapore’s swap rates will need to rise to offset an expected weakening of the currency.
The city-state’s dollar is around the lowest levels in five months versus the greenback, which may put upward pressure on local rates. The central bank is also less likely to pump liquidity in the near-term, according to analysts. And while in the past Federal Reserve interest-rate cuts would help lower Singapore rates too, that link has broken down.
