The Week In Numbers: A One-way Bet

It seems almost like a one-way bet for the US dollar, at the moment. The US currency hit an 11-year high against a basket of other currencies this week. In 2004, US$1 would have bought S$0.58. Today, the same dollar would buy S$0.72 – a rise of 22%.

As things stand, it looks as though there are more people betting on a US interest-rate rise than those who think that the Federal Reserve has somehow forgotten how to raise the cost of borrowing anymore.

The latest employment figures, which showed that 295,000 jobs were created in February merely adds more fuel to the interest-rate debate by suggesting that the US recovery could be firmly under way.

A higher greenback could bode well for companies that earn their profits in dollars. But it could also weigh on commodities, which tend to be priced in dollars. That might heap additional pressure onto palm-oil companies that include Golden Agri-Resources (SGX: E5H), Olam International (SGX: O32) and First Resources (SGX: EB5).

A possible hike in US interest rates lifted Singapore’s interbank offered rate, SIBOR, to 0.836% this week.  SIBOR is widely used in calculating the cost of home loans. Consequently, a rise in SIBOR is unlikely to be welcomed by homebuyers, who could see their non-discretionary income cut through higher mortgage repayments.

It seems that Japan did not grow quite as quickly last year as everyone thought. At first, it appeared that Japan’s economy grew 2.2% in the last three months of 2014. But that has now been revised down to 1.5%. Interestingly, consumer spending was better than the preliminary data showed.

India is expected to overtake China as the next Asian powerhouse. According to the International Monetary Fund, India’s economy could grow by 7.2% this year. Additionally, while China’s economy is expected to continue to slow next year, India’s economy could grow by as much as 7.5% in 2016.

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