The Singaporean dollar declined drastically during the past few months against primary currencies like the USD and EUR. Nonetheless, many local firms exposed to these markets said increases in their operating expenditures remain manageable.
These companies were able to implement strategies for controlling currency fluctuations like FOREX hedging along with diversifying exposures to various markets. These lessen effects of a weaker local currency.
The SGD weakened roughly eight percent against the US dollar and almost 10 percent against the euro since April. This was the time the local currency reached its highest peak in 2015 against said currencies. Last October 1, the Singapore dollar changed hands at S$1.4269 to USD and S$1.5915 to EUR.
According to the spokesperson of one corporation, there was a stable mix of revenues in Singapore dollars from domestic sales which helped allay the FOREX impact.
This company placed a currency buffer on overseas deals. It imports products from Greece in euro denomination and exports these goods to China in USD.
Many local consumers have also decided to reduce their online purchases during the last two months. During that period, local merchants were able to generate a 40 percent increase in terms of sales.
Many economists stated the currency’s rise and fall on the broader economy has been subdued up to now. One economist noted that the pathetic Singapore dollar does not automatically make merchants’ exports cheaper. The nation lacks the natural resources. Henceforth, these should be imported to produce commodities for export so that costs will continue to be higher compared to countries in North Asia that produce similar goods.
The USD climbed against EUR as international stock markets scaled up and private sector jobs statistics boosted bets that the US Fed will increase interest rates before the end of 2015. On the other hand, the euro declined on reports that inflation in the euro zone inflation has become negative.
Private employers in the US added 200,000 jobs last month beating projections and pointing out employment growth will prod the central bank to increase cash rates this year, based on the ADP’s National Employment Report.
The US dollar index went up 0.45 percent for a 0.7 percent gain during the past three months.
USD was also up 0.30 percent versus the Japanese yen to more than 120 yen. It was also steadier versus the Swiss franc and flat compared to the UK pound sterling.
The common currency declined against the YS dollar 0.6 percent to $1.1180. It was behind the UK currency by 0.6 percent following the release of inflation reports from the Euro zone.
Prices in Europe dropped 0.1 percent in September after increasing 0.1 percent below projections and under the target of European Central Bank which is below two percent.
Market traders believe a continuous decline below zero reinforces apprehensions of policymakers regarding the euro’s influence on financial scenarios. Meanwhile, the ECB is looking at inflation expectations and decreases in the headline rate
The euro gained against its US counterpart during the quarter since investors engaged in euro-financed trades on riskier assets and up-and-coming currencies.
The Aussie dollar moved up on positive manufacturing figures from China.
The AUD traded at US70¢ and touched a low of US69.9¢ initially as the USD followed high equity markets. However, indications of improvement in the official factory yardstick of China sent the AUD higher at US70.5¢.
The official purchasing managers index of China was listed at 49.8 (September) which still shows a contraction of the national economy but this was a bit higher than the 49.7 last August.
According to a senior trader of OANDA foreign exchange conversion firm based in Canada, this data is a relief for the market and gives the currency some market positioning and support for profit-taking.
Meanwhile, Goldman Sachs is purchasing Aussie dollars in advance of the forthcoming US rate increase by December. Observers say the AUD can go up to a maximum of US75¢. Investment bank Barclays projected the local dollar together with currencies of other commodity-heavy economies like Canada and New Zealand will continue to drop by as much as 12 percent.
Barclays bet on AUD is in accordance with expectations of local banks for the currency’s direction over the bullish position of Goldman which sees the AUD dropping to US65¢ by the end of next year.
For the Aussie currency, the basic mix is global risk, indicators of the Chinese economy and local monetary policy speculation, according to some FOREX strategists all over the world.
There was mixed trading for the US dollar with unpredictability of world markets allaying the possibility of an interest rate increase by the US Fed. On the other hand, the commodity currencies of Australia and Canada made some gains as a result of this development.
Global stocks declined to record two-year lows as costs of raw materials and emerging markets worldwide continue to be pressured. Prices of commodities increased but remained close to multi-year lows because of apprehensions about the economic slowdown in China.
Meanwhile, the shares of mining and trading corporation Glencore dropped by roughly one-third caused by fears of the company’s debt levels. This generated gains of four percent in London helping both AUD and CAD.
The Aussie dollar went up 0.33 percent ($0.70120 after recovering from a trough of $0.6934 while the US dollar increased 0.16 percent versus the Canadian currency at C$1.33376.
The USD index was practically flat and moved ahead 0.07 percent as traders were very careful ahead of the employment report from the US.
According to a currency strategist, traders are faced with the USD’s rally and fear of instability in monetary markets.
The Swiss franc climbed higher by 0.2 percent versus the US dollar at 0.9710 francs per USD. The Japanese yen was to some extent stronger against the US dollar and traded at 119.90.
The common currency euro dropped 0.1 percent both against the USD and JPY as consumer prices in Spain plunged to the lowest in seven months last month while regional data from Germany showed inflation close to almost zero.
The Chinese currency moved up versus the US dollar after the People’s Bank of China (PBOC) set a more stable midpoint while commercial banks sold dollars to comply with demand for local currency liquidity earlier than an extended Chinese National Day celebration.
Liquidity demand for the yuan normally surges as residents withdraw money and companies release wages of employees.
A trader from a Shanghai bank said banks sell dollars to avoid risks of dollar weakness.
The central bank fixed the midpoint rate at 6.3729 per USD which is 0.09 percent steadier than the previous rate of 6.3785.
The spot market first opened at 6.3725 for every US dollar and changed hands to 6.3691 at the middle of the day which was 0.08 percent stronger than the previous closing.
Traders mentioned few indications of PBOC intervention after the yuan presented indications of stability during the last few weeks. The yuan plummeted after the PBOC devalued the currency during the middle of August.
President Xi Jinping said there was no reason to for the local currency to decrease in value in the long-term, stating the exchange rate was becoming firm.
The summary of PBOC’s third-quarter meeting on monetary policy was published last week and assured the people it will keep the currency basically constant.
Offshore yuan traded 0.38 percent weaker compared to the onshore spot of 6.3931 per one USD.
Offshore forwards contracts traded at 6.596. it was 3.38 percent weaker compared to Monday’s midpoint.