The consumer price index rose 5.2 percent from a year earlier, after climbing 4.6 percent in February, the Department of Statistics said in a statement today. That exceeded the predictions of 17 of 18 economists in a survey, where the median estimate was for a 4.7 percent increase. The core inflation rate was 2.9 percent in March.

The Monetary Authority of Singapore raised its 2012 inflation forecast this month as it diverged from most other Asian central banks that have left borrowing costs unchanged or eased monetary policy in recent weeks.

The Singapore dollar is the region’s best performer this year as investors bet the island will tolerate a stronger currency to curb price gains that have been fuelled by more expensive home rentals and surging car permit costs.

“What’s been messing things up are the COE prices,” said Edward Teather, a Singapore-based economist at UBS AG, referring to the car permits known as certificates of entitlements. “If COE prices keep going up at their current pace, it’s going to make it difficult for the headline inflation numbers to fall.”

Teather had predicted a 5.3 percent rate for March, the closest estimate to the March figure.

The Singapore dollar traded at S$1.2485 against the US dollar at 2:49 p.m. local time. It strengthened as much as 0.1 percent after the inflation report.

Greece continued to drive market sentiment as hopes that the country would receive its second bailout package improved, pushing appetite for Asian currencies and other risk sensitive assets higher.

“As it is, our underlying view that the Chinese yuan will continue to appreciate in the course of the year is a key support to Asian currencies across the board for 2012,” OCBC said in a note.

“For now, we expect caution to sustain in the market, keeping the US dollar supported above the S$1.2500 mark.”

An analyst at a foreign bank expects the U.S. currency will trade in a S$1.2550 to S$1.2615 range in the near-term.

Currency markets now await the outcome of the Federal Open Market Committee’s policy meeting due later Tuesday. Singapore government bond yields were slightly higher at the longer end on the improvement in regional equities markets.

The US dollar, which was quoted as high as S$1.2522 overnight, was changing hands around S$1.2495 in the Asian afternoon, compared with S$1.2465 around the same time Wednesday.

Overnight comments by US Federal Reserve Chairman Ben Bernanke that the economic recovery in the U.S. was “uneven and modest” led investors to buy into the perceived safety of the greenback.

Analysts expect the Singapore dollar to remain in a range, with no clear direction.

“There has been a bit of a bounce in the Singapore dollar today, though nothing substantial. However, risk appetite remains pretty solid and we expect the pair to stay in a range,” an analyst at an international bank said. He tipped support for the US dollar near S$1.2430 and resistance at S$1.2520.

Purchasing managers’ index data from key Asian economies presented a mixed picture of the region, with renewed confidence in China’s manufacturing activity and slightly weaker sentiment in India.

Singapore government bonds were a bit higher across maturities as investors kept a watchful eye on economic developments across the globe.

The US dollar, considered a safer bet, gained early in Asia because of concerns about the health of Europe’s economy and uncertainty over the implementation of Greece’s debt deal.

But it gave up those gains toward the close of the Asian trading day and was quoted at S$1.2552 late in Asia, down a little from S$1.2562, where it was quoted around the same time on Wednesday.

Markets are unsure if the recently agreed rescue package for Greece will be implemented smoothly, and the U.S. dollar is likely to gain support in the coming days after losing some appeal since the beginning of this year as stronger global data boosted sentiment, analysts said.

“Markets are on the defensive right now, which means the dollar could hold up,” said DBS Bank currency analyst Philip Wee.

Singapore government bonds too were little changed with investors awaiting fresh trading cues. The yield on the 10-year bond was down 1 basis point, or a hundredth of a percentage point, in line with the weaker sentiment. The 2-year bond was unchanged.

Traders and analysts say the market will remain cautious in coming sessions ahead of a eurogroup meeting on the matter Monday.

“The Greece debt issues will likely keep sentiment cautious,” United Overseas Bank said in a research note.

Analysts also said sentiment took a knock from Moody’s Investors Service putting 17 global banks and 114 European financial institutions on review for possible credit-rating downgrade.

On the domestic front, the Singapore dollar didn’t react much to government data released Thursday showing the economy contracted 2.5% in the fourth quarter of 2011 in seasonally adjusted, annualized terms, rather than 4.9% estimated last month.

“The continual recovery in the U.S. and stabilisation in the euro zone situation are more important for Singapore companies’ earnings growth outlook and monetary policy, in our view,” Credit Suisse said in a research note.

However, volumes over the next few trading days are expected to be light given the Lunar New Year holidays in most of Asia Monday through Wednesday.

OCBC Research said the US dollar’s fall below the S$1.2750 mark on Thursday is “in line with brightening global risk appetite levels, and the pair may see a persistently heavy tone if risk appetite improves further.”

It expects the US dollar to stay in a S$1.2670 to S$1.2770 range in the near term.

Singapore government bond yields were slightly higher at the longer end as the improvement in global sentiment toward stocks continued to erode appetite for safe haven assets.

Money Transfers to Singapore Dollar (SGD) with Currencies Direct

Currencies Direct, with more than £1.5 billion annual turnover is one of Europe’s leading non-bank providers of international payment and money transfer services. Since its formation in 1996 Currencies Direct has maintained its focus on being an innovative service provider of foreign exchange transfers for consumers and high net worth individuals with an extensive client base of 200,000.

Head quartered in the City of London (United Kingdom) with operations in Europe, Africa, Asia and the United States, Currencies Direct is part of the Azibo Group, a privately owned investment company.

Currencies Direct can typically save clients up to three per cent of the value when sending a payment to Singapore by providing commercial foreign exchange rates rather than retail rates to its customers. Money transfers are free for all transactions over £5000 and those wishing to make regular transfers to Singapore every month also benefit from fee-free transactions.

Find out more about how you can transfer money to or from UK sterling to Singapore Dollar’s with Currencies Direct, click the link: Currencies Direct

Making Sure Your Singapore Dollar Money Transfers Are Safe

Currencies Direct is authorised and regulated by the Financial Services Authority FSA) FRN 504360, under the Payment Services Regulations 2009, for the provision of payment services. In addition, Currencies Direct subscribe to the Non-Investment Products code created by the Bank of England which regulates companies involved in foreign exchange transactions such as spots and forward contracts.

Currencies Direct Ltd holds a certificate of registration for Money Laundering Regulation (MLR). Registration number: 12132225. Currencies Direct Ltd – Authorised and regulated by the Financial Services Authority (FRN No: 504360) for the provision of payment services.

Ensuring your money is safe and you are treated fairly, is the fundamental principle of how Currencies Direct do business. You can trust Currencies Direct to protect your funds when you make an international money transfer.

Find out more about how you can transfer money to or from UK sterling to the Singapore Dollar, the US dollar, the euro and many other global currencies with Currencies Direct, click the link to visit their website: Currencies Direct

Positive macroeconomic news out of the US, China, Singapore and Germany have helped shore up demand toward regional units and global stocks, although investors generally remain hesitant about taking any strong directional views on currencies.

“Developments in Europe are really the focus, there’s not so much data in Asia today. The coming European bond auctions will be key,” a trader at a foreign bank said.

OCBC Research expects the US dollar to hold the S$1.28 to S$1.29 range pending any major cues out of the euro zone.

Singapore government bond yields were higher at the shorter end of the curve as the improvement in global sentiment lures investors away from safe haven assets.

Players remained reluctant to chase the regional units too aggressively, however, as they awaited fresh developments in Europe’s debt crisis.

The Singapore dollar strengthened as investors were relieved by data showing the country’s economy contracted just in line with market estimates.

Persistent worries about the eurozone’s debt crisis forced investors to take profits from emerging Asian currencies rather than chasing them up further, dealers and analysts said.

“The (emerging Asian currencies’) outlook for Q1 remains negative as the euro zone fiscal crisis has not been solved and will come back to bite,” said Dariusz Kowalczyk, senior economist and strategist for Asia ex-Japan at Credit Agricole CIB in Hong Kong.

US dollar/Singapore dollar broke through the 61.8 percent Fibonacci retracement of 1.2903 as interbank speculators and short term leveraged accounts sold it.

—————————————————————————————————————————————————–
Sending money abroad? Use Moneycorp to transfer most of the world’s currencies overseas instantly, commission free. Moneycorp, trusted foreign exchange since 1979, visit their website today: Moneycorp Money Transfers
—————————————————————————————————————————————————–

Article continues…

Investors were relieved that fourth-quarter GDP data was not worse then expected.

The economy contracted 4.9% in the fourth quarter of 2011 from the previous three months, roughly in line with economists’ estimates.

If the pair ends the day lower than the retracement, it may head to the 76.4 percent retracement of 1.2851.

Offshore funds sold dollar/won, helping the pair break through a 20-day moving average of 1,151.7 and pushing it down to around the top of the daily Ichimoku cloud.

Some local players also cleared long positions to stop losses. But South Korean importers bought dollars for settlements. “Despite offers from some foreign names, I don’t expect further falls from here. Importers bids are pretty strong for now,” said a foreign bank dealer in Seoul.

The US dollar was quoted as low as S$1.2890 during the session, the weakest since Dec. 8, before it recovered a bit to reach S$1.2905 in the closing moments of Asian trade.

The greenback fell in the morning after the government released data showing that Singapore’s economy contracted 4.9% in the fourth quarter from the third in seasonally adjusted and annualized terms, slightly less than the 5.5% predicted by analysts in a poll.

“There is some risk-taking in the market, and that’s helping Asian currencies,” said a trader at a regional bank. “The U.S. dollar-Singapore dollar pair may trend a little lower for the rest of the session.”

He tipped support for the greenback over the rest of the global day at S$1.2890, with resistance at S$1.2990.

The euro and risk-sensitive currencies were favored against the US dollar Tuesday as traders returning to work after the quiet holiday period began to clear some of the short positions they had taken before the end of 2011, according to market participants.

Better than expected manufacturing data from China overnight also helped to brighten sentiment, pushing the Australian dollar to a three week high.

Singapore government bonds were a little higher across maturities amid low volumes, as dealers remained cautious on the first trading day of the year.