Sibor spikes ahead of expected Fed hike

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Short-term key interest rates spiked here yesterday ahead of an expected hike in United States rates next month.

Market watchers also say the normally sticky short-term interest rates - the one-month and three-month Sibor - are playing catch up.

"The market may be pre-empting the December Fed hike," said DBS Bank rates strategist Eugene Leow.

The US Federal Reserve is widely expected to hike interest rates this month for the third hike this year.

The benchmark three-month Sibor or Singapore interbank offered rate rose six points to 1.183 per cent, the highest since March 2016.

The three-month Sibor is typically used to price home loans.

The one-month Sibor also shot up about six points to 1.067 per cent while the overnight rate rocketed to an intraday high of 1.2 per cent after averaging between 0.25 to 0.30 per cent last week.

The moves all point to a liquidity crunch that has been building up, said Mr Victor Yong, United Overseas Bank interest rate strategist. - SIOW LI SEN