Australian produce such as meat, dairy products and wine more costly to import<\/a>. Consumers could feel the pinch should retailers choose to pass on the higher import costs, noted OCBC Bank foreign exchange strategist Christopher Wong.<\/p>\nThe Australian dollar\u2019s strength is largely driven by its role as a \u201ccommodity currency\u201d, with rising prices for key Australian exports such as natural gas, iron ore, lithium and gold lifting demand for the currency.<\/p>\n
Mr Saktiandi Supaat, head of foreign exchange research at Maybank, explained that as a resource exporter, \u201cAustralia can benefit when oil and commodity prices rise, unlike many energy-importing economies\u201d.<\/p>\n
He noted that the Australian dollar has been supported by stronger terms of trade alongside resilient demand from China for Australian exports. <\/p>\n
The Reserve Bank of Australia has also kept interest rates relatively high to tackle persistent inflation, which is drawing foreign investors seeking better returns and helping to keep the Australian dollar strong.<\/p>\n
This shows that while Singapore\u2019s monetary policy generally supports the Singapore dollar against a basket of currencies, it can still weaken against specific currencies like the Australian dollar when those currencies are driven higher by their own factors, said Mr Saktiandi.<\/p>\n
The Monetary Authority of Singapore (MAS) on April 14 tightened its monetary policy stance for the first time since 2022 to allow for a stronger currency to manage inflation as oil and natural gas prices jumped amid the Iran war.<\/p>\n
Saxo sales trader Sean Teo said the Australian dollar will continue to stay strong because of expectations that the Reserve Bank of Australia will keep interest rates higher for longer to counter persistent inflation.<\/p>\n
In contrast, the Singapore Overnight Rate Average \u2013 a key benchmark for borrowing costs \u2013 is around 1 per cent, which is well below Australia\u2019s rate of about 4 per cent. <\/p>\n
This gap has made the Australian dollar more attractive to investors, said Mr Teo.<\/p>\n
He noted that while the Australian dollar has also strengthened against most major currencies, the Singapore dollar is managed within a policy band, which can limit how much it strengthens once it nears the upper end of that band.<\/p>\n
OCBC\u2019s Mr Wong noted that in the early stages of the Iran conflict, the Singapore dollar held up better than the Australian dollar, supported by MAS\u2019 policy and its role as a more stable currency during periods of geopolitical stress. <\/p>\n
But the trend has reversed since the ceasefire between the US and Iran, with the Australian dollar gaining ground as market sentiment turns more positive.<\/p>\n
\u201cThe next phase depends on whether markets remain defensive or turn more risk-on. If geopolitical uncertainty persists, including tensions around the Strait of Hormuz, recent Australian dollar to Singapore dollar gains may stall,\u201d said Mr Wong. <\/p>\n
\u201cBut if sentiment continues to improve, there is room for further upside, with our year-end forecast at 95 Singapore cents to one Australian dollar,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"SINGAPORE – The Australian dollar has climbed to its strongest level against the Singapore dollar in a year,…\n","protected":false},"author":2,"featured_media":399808,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":["post-399807","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-new-zealand","tag-newzealand","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/399807","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=399807"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/399807\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/399808"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=399807"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=399807"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=399807"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}