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US dollar falls to 7-month low against the Singdollar

US dollar falls to 7-month low against the Singdollar

US one hundred dollar bills. (REUTERS/Kim Hong-Ji/Illustration/File Photo)

SINGAPORE: The greenback fell to a seven-month low against the Singapore dollar on Thursday (Jan 31), after the Federal Reserve sent the clearest signal yet that its three-year drive to tighten monetary policy is close to an end amid rising pressure on the economy from slowing global growth.

As it held interest rates steady, the US central bank discarded its promises of "further gradual increases" in interest rates, and said it would be "patient" before making any further moves.

The dovish signal from the Fed sent the dollar tumbling against most other currencies Wednesday and extending the losses in Asia.

On Thursday, the US dollar touched 1.3453 against the Singapore dollar, its lowest since Jun 15 last year. It last traded at 1.3455. Year-to-date, the US dollar is down 1.16 per cent against the Singdollar.

The US currency's fortunes had turned down even before the Fed's signal on Wednesday, with policymakers in recent weeks indicating that a cautious approach would be adopted following the four rate increases delivered in 2018.

Analysts have accordingly turned bearish on the dollar, which outperformed last year thanks to the rates impulse and a robust US economy, as a Sino-US trade war and rising pressure on global growth threaten to dent output at home.

Indeed, Fed Chairman Jerome Powell said on Wednesday the case for rate increases had "weakened" in recent weeks, citing "cross-currents" such as slowing growth overseas and the federal government shutdown making the US outlook less certain.

That means the Fed is unlikely to risk putting the brakes on US economic momentum, analysts say.

Source: CNA/agencies/aj(rw)

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