A key benchmark lending rate fell below the 1.0 percent mark at its latest rate fixing on Thursday — its lowest level in about a month.
The 3-month Singapore interbank offered rate (SIBOR) slipped to 0.946 percent from the 1.012 percent rate on Wednesday amid an improved outlook on the Singapore dollar.
This follows the Monetary Authority of Singapore’s (MAS) surprising decision on Tuesday to maintain its monetary policy, causing the Sing dollar to rally. The move to continue allowing a modest and gradual appreciation of the local currency was, according to the central bank, consistent with the benign inflation outlook and moderate growth prospects for the whole of 2015, and “appropriate for ensuring medium-term price stability in the economy”.
Weakness in the Singapore dollar can put upward pressure on local interest rates as investors seek further incentive to hold on to the weakening currency, while a stronger currency helps keep interest rates down like for SIBOR – the rate at which most home loans are pegged at.