SINGAPORE--The Singapore dollar strengthened Thursday to its highest levels in three and a half months, as the U.S. dollar slumped broadly after the Federal Reserve unexpectedly held off from scaling back its bond-buying program at its September policy meeting.
The U.S. dollar was quoted at S$1.2448 late in Asia Thursday, after falling as low as S$1.2420 earlier in the session--its lowest level since June 7. It had changed hands at S$1.2595 late Wednesday.
"Going ahead, the Fed's inaction may continue to engender risk seeking behavior across asset markets in the short term," OCBC said.
The house estimated that the "extreme boundaries of the [Singapore central bank's nominal effective exchange rate] fluctuation band have also been shaded lower to S$1.2390 and S$1.2745 respectively... As such, expect some market caution if the S$1.2400 floor is approached," it said.
Maybank meanwhile tipped support for the U.S. currency first at S$1.2420, before S$1.2405.
Singapore government bonds were little changed to slightly lower across the curve as investors switched their focus to local equities amid renewed risk appetite.
