The Singapore dollar strengthened against the U.S. dollar on Aug. 14, extending gains and touching a fresh 2024 high, Bloomberg reported.

The Singapore dollar began rallying in August and is the third-best performer among Asian currencies in 2024, after the Malaysian ringgit and the Hong Kong dollar.

This was after the Monetary Authority of Singapore (MAS) is expected to keep a tighter monetary policy relative to the U.S. Federal Reserve in 2024.

On Aug. 14, the Singapore dollar rose as much as 0.1 per cent from its previous close to reach S$1.3163 per US$1.

This was the highest since Dec. 28, 2023 and up 3.6 per cent from its year’s low of S$1.3655 per US$1 on Apr. 30, 2024.

The Singapore dollar was trading at 1.3152 by 8pm Singapore time.

Changes in policies and expectations

MAS is seen easing only in 2025, while bets are increasing for the Fed to cut interest rates as soon as September 2024, a move that reduces the appeal of the U.S. dollar, Bloomberg reported.

MAS not easing yet means that the Singapore dollar is still kept on an appreciating path to blunt imported inflation.

MAS uses the exchange rate as its main policy tool rather than interest rates.

A retreating greenback boosted exchange rates across the region, with Asian currency performance jumping to the highest since March 2024, it was also reported.

The Singapore dollar outperformed Asian peers in 2022 and 2023, but in 2024, that could change, according to Bloomberg's analysis.

The Singapore dollar tends to underperform in a broad dollar downtrend, it was predicted.

Singapore’s currency weakening to S$1.35 per U.S. dollar by year-end is expected as the greenback rebounds.

Top photo via Mothership & Pixabay