During early deals on Tuesday, the Singapore dollar climbed to a 6-week high against its US and Hong Kong counterparts on speculation U.S. efforts to mop up toxic mortgage-related assets from banks will help unlock credit and stimulate demand for emerging-market assets. On the other hand, the Singapore currency declined to a 22-day low versus the British pound.
Yesterday, the Obama administration released details of its latest plan to solve the massive, debilitating banking crisis that continues to hold the financial system in its crushing grip.
The plan unveiled by Treasury Secretary Timothy Geithner will set up an investment fund to buy mortgage-related securities and other assets that are hurting the balance sheets of banks. The new Public Private Investment Program would combine taxpayer money with private funds, aiming to buy loans and free up banks to renew lending.
Geithner's plan involves using up to $100 billion in funds from the $700 billion financial rescue plan passed in 2008 in addition to capital from private investors to generate an estimated $500 billion to purchase the toxic assets, a number that could double to $1 trillion over time.
Singapore's Strait Times Index is gaining 27 points, or 1.63% to 1,691.
Against the US currency, the Singapore dollar rose to 1.5033 during early Asian deals on Tuesday. This set the highest point for the Singapore dollar since February 11. On the upside, 1.49 is seen as the next target level for the Singapore dollar. The pair was worth 1.5088 at yesterday's North American session close.
The Singapore dollar that closed Monday's New York deals at 2.1986 against the British pound declined to 2.2160 at 1:45 am ET Tuesday. This set a 22-day low for the Singapore currency. On the downside, 2.237 is seen as the next target level for the Singapore dollar.
The Singapore dollar that reached a high of 2.0518 against the European currency during Tuesday's early Asian deals weakened thereafter. At 1:45 am ET, the Singapore currency slipped to 2.0587, compared to 2.0568 hit late New York Monday.
The Singapore dollar traded higher against the Hong Kong currency during Tuesday's early deals. At 11:55 pm ET, the pair climbed to 5.1530, its highest point since February 13, 2009. The next upside target level for the Singapore currency is seen around 5.19. The pair closed Monday's New York deals at 5.1372.
The French February consumer spending and business confidence indicator for March, Euro-zone January current account, UK February CPI and the manufacturing PMI reports from the major European economies are expected to influence trading in the European session today.
Across the Atlantic, today will be a busy day including a testimony on AIG from Federal Reserve Chairman Ben Bernanke and U.S. Treasury Secretary Timothy Geithner to the U.S. House Financial Services Committee.
AIG has come under severe attack for awarding multimillion-dollar bonuses to executives following a $180 billion bailout from the U.S. government.
Markets will also receive information on the Richmond region manufacturing sector. The Richmond Fed manufacturing index is expected to remain unchanged at -51 in March.
The Federal Housing Finance Agency will also release its house price index for January. House prices are expected to fall 0.9% against a 0.1% increase in December.
In the afternoon, James Bullard, President of the Federal Reserve Bank of St. Louis, will speak in London.
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