Singapore Affected by the Recent Movement of World Stocks

For over four months, world stocks yet again rose to their highest level on Thursday. The dollar also gained for the third day as markets were viewed positively ahead of the meetings between the top policymaker and oil producer.

At the IMF’s spring meeting, Singapore set the tone as their central bank eased their policies. Meanwhile, Europe was looking at the meeting of the Bank of England since sterling was continually having troubles over the vote on EU membership in June.

Oil prices have dropped again as OPEC advised of slowing demand and Russia suggested that there may only be a loose agreement on outputs at the exporter meeting in Doha this weekend.

The fall came when dollar — the currency most commodities were priced in — had yet again rose up to its highest one-day gain in a month. It was valued at $1.246 per euro, which is well above its 6-month low of $1.146, on Tuesday. It was also up by 0.1 percent against the yen to 109.42 yen from the 17-month low of 107.63 yen.

“The dollar has been doing well over recent days particularly against Asian currencies today after the MAS (Singapore central bank) eased policy,” says Societe Generale FX strategist Alvin Tan. “We have the IMF meetings coming and we also have the Doha meeting which actually for the markets could be more important considering how bulled u the oil market has been recently.”

European stocks, on the other hand, was subdued for the first few hours as the traders cashed in after they’ve gained 2.6 percent on Wednesday and as miners dropped on lower prices of oil.

The overnight big gains in Asia, however, implied that the MSCI’s 46-country All World stocks index has been its highest since mid-December, being up for 5 straight days. Since Friday, Asian shares have continually gained 5 percent.

The central bank of Singapore has set the Singaporean dollar policy band’s appreciation rate at zero after data showed economic growth has stalled in the first quarter this year. This caused the biggest fall for the Singaporean dollar in 9 months, which resulted to a drop in other Asian currencies. The Korean won declined as much as the Singaporean dollar, sinking by 1 percent against the USD.

“It’s very interesting, and eye-catching, that the MAS has gone back to post-global financial crisis settings, and sends as strong message about the weak external environment,” said the senior currency strategist of Westpac in Sydney, Sean Callow. “As one of the world’s most trade-sensitive economies, Singapore’s concern over a less favorable external environment should be noted by the likes of South Korea, Australia, and New Zealand.”

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