Currency Briefing - what you need to know for Mon April 16, 2012

The local currency sits at $1.2511, with appreciation against the US dollar expected to be gradual.

IG Markets Singapore said:

The Singapore dollar has given up some of the gains it made against the greenback after the Monetary Authority of Singapore (MAS) set the local currency on a slightly faster rate of appreciation.

After the announcement on Friday the Singapore dollar strengthened to $1.2463. It now sits at $1.2511, back within the $1.25-$1.26 tight range it has been trading in.

While the local currency could still gain in the short-term against the greenback, the appreciation is expected to be slow and gradual.

The Monetary Authority of Singapore also restored a narrower trading band for the local dollar, reflecting reduced tolerance for volatility.

The Singapore dollar was also supported by better-than-expected economic growth in the first quarter. The economy grew 9.9% on a quarter-on-quarter basis.

RBS meanwhile noted (for 13 April 2012 trading):

A combination of factors, including soft Chinese 1Q GDP and a decline in US consumer confidence contributed to risk aversion.

The USD strengthened against the majors but also aiding the USD was the higher than expected core inflation print in March, which may have reduced expectations for future Fed easing.

As our economists note, a firming of the more cyclical core inflation components may suggest that inflation pressures are broadening out.