The FED has confirmed that there will be two more rounds of interest adjustments; in coming Oct & Nov. Singular objective of the interest hike, mentioned many times over by the FED is to bring inflation back down to the 2% mark from the current 8.1%.

It is a feat that I strongly believe will not be achieved by end 2022; there is just too short a runway for the effects of interest hike to bear fruits. It is standard knowledge that market will take time to react to changes in policy change/s too.

With the various reports that will be coming out soon, hopefully they will demonstrate signs of signifcant slow down - signalling to FED that the interest hike is showing effect. Hope this will enable the FED to heave a sign of relief and perhaps (?) reduce the coming % hikes. Hike they (Fed) will nonetheless.

With the FED already re-calibrated the maximum interest rate from 4% to 4.6% band - the greenback will still have room to further "strengthen" until the upper limit of 4.6% materialises ? Irony of all these interest hikes is not as if US economy is really prospering & thriving but rather due to overtime fall out effects of FED's "careless" and "excessive" expansionary policy due to their attempt to keep the economy and stock market bouyant during the Covid-past 2 years.

The weakest link of an opened economy like Singapore's; where practically everything is imported, is that during inflationary times, inflation is imported into the country inevitably; like it or not not.

To cushion the impact, the Central Bank has Hobso's choice but to raise the local Singapore dollar interest rate as well, in an attempt to stave-off the fallout effect of inflation. Sing dollar needs to be "strengthen", making it "attractive" in the short to medium term.

Price to pay of course is :

1. Cost of living has been on a trajectory increase path over past few months. What used to cost $1; has gradually grown to cost $1.30 or more.

2. Cost of continual investment in US stock market. It has become more and more expensive to invest in US stocks due to the strength gained by the US dollars against the Sing dollar. Refer to attached file on Sgd versus USD, its on decline. 

If one thinks further, imagine in the near future when the exchange balance between the 2 currencies reverts back to the usual-generic exchange balance - when its time to sell a US share, the profits will definitely be less than what was paid during purchased. Agree ?

3. If a non-US citizen decides to take a holiday in US; then outlay and budget will definitely costs more. This may discourages any holidays in the US in the current term until (maybe) the currency equilibrium oscillates back to the norm ?

Alternative approach would be to trim the holiday to shorter period? 

A change of holiday venue is definitely on the card. Both EU and UK would likely benefit from the respective currency's decline against the Greenback; mainly due to the fallout with Russia and the refrain from buying its energy products.

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