The Singapore dollar was on track for its largest weekly gains in 16 months, rising on Friday after the central bank eased policy less aggressively than expected, though some investors booked profit when intervention was spotted. The Monetary Authority of Singapore (MAS) contained the future pace of the currency's appreciation to cope with a slackening global economy, but the easing was more modest than anticipated due to concern about inflation.
After the decision, the Singapore dollar quickly strengthened 0.7 percent to 1.2688 per dollar but then cut some gains as investors took profit with the agent banks for the MAS seen selling the local unit at 1.2700. The city-state's currency broke through that line in late Asian trading, but investors stayed wary of more intervention. It stood at 1.2693 versus the greenback.
"I don't mind shorting dollar/Sing around this level if the euro stays around 1.38. But I'm waiting for better levels, probably around 1.2740, as agents will be around today," said a senior Asian bank dealer in Kuala Lumpur. The Singapore dollar has risen 2.2 percent so far this week versus the greenback, according to Thomson Reuters data, outperforming other emerging Asian units. If it maintains the gain, it will be the largest weekly percentage advance since the week ended on June 20, 2010.
In the previous two weeks, investors had already turned bullish on the local currency, a Reuters poll showed. The South Korean won also reported its biggest largest weekly gain in six months with a 1.9 percent rise. Still, some investors remained reluctant to buy emerging Asian currencies on continuing worries about the eurozone's sovereign crisis and a slowing global economy. US dollar/Singapore dollar slid to 1.2688 after the MAS decision, compared with 1.2770 just before the announcement. Dollar/won barely changed as exporters' supplies offset dollar demand from custodian banks and importers.
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