US dollar rises to 13-month high against Singdollar on Turkish crisis

US dollar rises to 13-month high against Singdollar on Turkish crisis

singapore dollar bank notes
File photo of a customer withdrawing cash from an automated teller machine. (File photo: AFP/Roslan Rahman)

SINGAPORE: The greenback rose to a 13-month high against the Singapore dollar on Monday (Aug 13), as a renewed rout in the Turkish lira sent investors scurrying for safety in the US dollar and other assets.

A currency crisis blew up last week in the Turkish lira on investor concerns over Prime Minister Tayyip Erdogan's increasing control over the economy and deteriorating relationship with the United States.

Turkey has drafted an economic action plan and will start implementing it on Monday morning to ease investor concerns, said Finance Minister Berat Albayrak.

“The tumbling in Turkish lira against the backdrop of deteriorating trade relationships resulted in surging demand for safety, and thus dollar and treasuries,” noted Ms Margaret Yang Yan, market analyst at CMC Markets Singapore. “The US dollar is gaining momentum amidst rising concerns over geopolitical and trade risks, on the back of strong fundamentals and Fed rate hikes,” she added.

On Monday, the US dollar rose to a 13-month intraday high of 1.3767 against the Singapore dollar, according to Bloomberg data. This is the highest it has been since Jul 14 last year.

The euro also stumbled to more than one-year lows, as did the Australian dollar.

“Worries of a Turkey shock on neighbouring EU banks coupled with the contagion effect upon emerging markets had gotten the best of investors across the globe. The reaction seen across markets appears to be one assuming the worst-case scenario rather than simply the current implications,” said Ms Pan Jingyi, market strategist at IG Markets. 

Source: CNA/agencies/aj(ms)