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Sibor jumps to 0.836% on US$ strength

The 3-month Sibor or Singapore interbank offered rate jumped to 0.836 per cent on Monday from last Friday on continued US dollar strength.

At Monday's level, the 3-month Sibor which is used to price home loans is up almost 3 per cent from last Friday, and 115 per cent higher from the 2014 low of 0.389 per cent.

The US dollar continued to rally on stronger jobs growth data out last Friday. Year-to-date, at S$1.3797, the greenback is up 4.09 per cent against the SGD.

"The big news over the weekend was the release of US jobs data, which showed the US economy adding 295,000 jobs in February (Jan: 239,000 revised)," said Maybank FX Research.

Unemployment rate fell to 5.5 per cent from 5.7 per cent in January but average hourly earnings disappointed, rising by just 0.1 per cent.

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"Still, the stronger jobs growth spurred expectations of a rate hike sooner rather than later, and this translated into a stronger dollar," said Maybank.

Said Eugene Leow, DBS Bank economist: "Adjustments in the lead-up to eventual Fed tightening from the perspective of an Asian economy tends to be a weaker currency and/or higher interest rates.

"Some adjustments in Asian FX and interest rates were made during the taper tantrums of 2013. But the process is incomplete."

"In the lead up to eventual Fed hikes, further adjustments are needed to deal with higher USD rates and a stronger USD," added Mr Leow.

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