SINGAPORE (Dow Jones)--The Singapore dollar was stronger late Tuesday tracking Asian currencies amid a rebound in risk appetite, but analysts said market optimism is contingent on developments in the euro-zone debt crisis.
The U.S. dollar fell as low as S$1.2887 after changing hands at S$1.2982 late in Asian trade Monday, extending a downward drift from its S$1.3006 high notched early Monday.
Given the fragility of global macroeconomic conditions, especially in Europe, "this will be a brief and shallow rally [for the Singapore dollar] in my view," said Thomas Harr, head of Asian FX strategy at Standard Chartered. He tipped the U.S. dollar to rise to about S$1.3500 by the end of the first quarter.
Maybank also noted investors' uncertainty over the euro-zone debt crisis and ongoing developments in Greece's debt talks with German and French banks. "The market is still awaiting risk appetite to be tested again in the upcoming Spanish and Italian auctions on Thursday," when the European Central Bank's policy meeting is also due to take place, the house said.
For Tuesday's session, Maybank tipped a range of S$1.2850 to S$1.3050 for the greenback.
Longer-dated Singapore government bonds fell as a rebound in local stocks drew investors away from safe-haven assets.
-By Chun Han Wong, Dow Jones Newswires; +65 64154 160; chunhan.wong@dowjones.com
