The Singapore dollar rose slightly on Friday due to stronger-than-expected domestic growth in 2012, but traders were wary about the currency’s outlook due to the government’s cautious economic view and doubts about the US Federal Reserve’s future policy settings.
According to the government, the trade-dependent economy is”cautiously positive,” whilst reiterating the growth target of 1-3 per cent for this year after stronger-than-forecast expansion last year.
Analysts and traders noted that the local currency is unlikely to escape from doubt over how long the US Federal Reserve will keep its quantitative easing in place.
Technically, the Singapore dollar is likely to weaken as it closed on Thursday below that day’s chart support of a 200-day moving average at 1.2411. If the Singapore dollar breaches the support level again, its weakness may accelerate and it could head to 1.2465, analysts said.
“Dollar/Singapore dollar was just slightly lower after the data, but the market is in a risk-off mode,” said a senior US bank trader in Singapore.
According to Thomson Reuters data, the city-state’s currency has weakened 1.4 per cent to the greenback so far this year.