Inflation data due this week is forecast to show only the slimmest of gains, which would give little cause for the Monetary Authority of Singapore (MAS) to tap the brakes on currency declines by adjusting the exchange-rate band it uses to ensure price stability. Unlike most other central banks, the MAS uses the currency as its main monetary tool, rather than interest rates.
The Singapore dollar is vulnerable to retesting a four-month low, with signs that benign inflation and a gradual economic recovery will keep the central bank on hold at its April monetary policy review.
Elevated US Treasury yields have already helped push the greenback through its 100-day moving average versus the city-state’s currency. While momentum stalled at 1.3531, just short of the 200-day moving average, it may just be a matter of time before the level is breached.
