Singapore dollar sits at $1.23

The local currency is forecast to remain in a tight trading range until Friday.

IG Markets Singapore said:

The Singapore dollar had a quiet end to the week despite the controversy over US employment figures.

The local currency sits at $1.23 this morning as traders turn to corporate earnings and Singapore Q3 figures to be released this week.

Speculation about the accuracy of unemployment figured falling below 8% is likely to die down today and attention will instead focus on the health of companies' balance sheets both locally and in the US.

The Singapore dollar may remain in a tight trading range until Friday when advance estimate Q3 data is released which is likely to show the local economy slipped into a technical recession.

This may deter traders from exposing themselves to the Sing Dollar opting instead for the safe haven of the greenback.

DBS Group Research meanwhile noted:

Friday will be the key date to watch for Singapore. Unless manufacturing and export data improve dramatically in September, Singapore is likely to report a technical recession in 3Q12.

Meanwhile, CPI inflation fell below 4.0% YoY in August for the first time since November 2010.

Hence, we expect the Monetary Authority of Singapore to moderate the appreciation pace of the Singapore dollar nominal effective exchange rate policy band to 2% a year from the current 3% pace.

Our end-year target for USD/SGD remains at 1.26.