The devaluation of China’s currency for second day in a row, has had a negative effect on the Singapore dollar, resulting in the country’s currency hitting its weakest level since June 2010.
Singdollar fell almost 1% to 1.4150 per US dollar, as a result of the devaluation of Yuan by 1.62% against US dollar, dropping to 6.4301. As expected from the devaluation, it is bringing down other Asian currencies to their lowest rate, weakening the Asian market.
However, the Singdollar is closely tracking the Yuan as analysts and traders suspect that it is included in the undisclosed currency basket used to manage monetary policy.
China’s central bank stated that the devaluation of the Yuan, is an action performed based on analysis of fresh economic data and an improved quotation mechanism, however there was no intentional sustained depreciation in the Yuan given the global and the domestic conditions of the economy.