SINGAPORE (Dow Jones)--The Singapore dollar was down late Thursday, reaching its lowest level against the U.S. dollar in nine months, after the Federal Reserve's announcement it will rotate into longer-term maturities spread gloom through the market and sent risky assets into a tailspin.
The U.S. dollar was at S$1.2923 late in Asia, its highest since January, after reaching a high of S$1.2974 in New York trade.
The Singapore unit has lost 5.6% of its value as part of a broad sell-off of riskier currencies. In a fortnight, it has erased virtually all its gains from 2011.
After the disappointment of the Fed's Wednesday announcement, which was seen as insufficient to shore up growth in the U.S. economy, attention will now shift back to the euro zone and the ongoing wrangling over Greek debt, said Selena Ling, head of treasury research at OCBC Bank.
"Hopes aren't running high" that Group of 20 meetings or International Monetary Fund meetings this weekend will produce much progress on the euro zone front, said Ling.
That could mean further downside for the Singapore dollar and other Asian currencies; near-term resistance for the U.S. dollar is seen at S$1.30.
According to Ling, the Singapore unit is now around 1.4% below the midpoint of its policy band, after its rapid September decline. That gives the Monetary Authority of Singapore little room to maneuver when it meets next month, she said.
The MAS is broadly expected to shift its bias to slower appreciation of the Singapore dollar, or even keep the unit flat, in response to slowing economic conditions in Asia.
Singapore government bond yields were slightly lower at the long end.
-By Martin Vaughan, Dow Jones Newswires; +65 6415 4033; martin.vaughan@dowjones.com
