Singapore dollar benefits from weak greenback

The local currency hit a one-year high against the US dollar and trades at $1.2215.

IG Markets Singapore said:

The Singapore Dollar continues to benefit from a weak US dollar this morning threatening to break through the $1.22 barrier.

Last week's long-awaited Fed announcement on QE3 saw the greenback lose significant ground against major currencies.

The local currency hit a one-year high against USD as a result and trades at $1.2215 this morning having held onto these gains.

But the Singapore dollar may face a test to break through the $1.22 barrier, if the QE3 honeymoon subsides.

However, unlike other Fed policy easing exercises, QE3 will drip-feed $40 billion into the economy each month rather than one huge cash injection so the effects could last longer and keep the greenback pegged in the short-term.