Archive for the ‘Currencies’ Category

M$ can fall further/ M’sia boleh

In Currencies, Malaysia on 10/10/2015 at 6:30 am

Using REER [real effective exchange rate] calculations which takes into account inflation means M$ could fall by another 32% to 5.59 to the US$.

Actually, this is a lot better than other Asean countries (ex S’pore).

So M’sians shouldn’t blame Rosmah or as she prefers to be know First Lady of M’sia (FLOM) for weak M$.

Ang moh cowboy bets against PRC

In China, Currencies on 06/10/2015 at 4:01 pm

A hedgie from Texas is betting big time against the yuan Dealbook reported:

BETTING ON FURTHER DEVALUATION OF RENMINBI Mark L. Hart III, a hedge fund investor based in Texas, has made high-risk, high-return wagers that the United States housing market would collapse and that Greece would go bankrupt. His most audacious gamble to date might be his bet on a 50 percent currency implosion in China, Landon Thomas Jr. reports in DealBook.

He predicts that the extreme drop will come when foreign investors pull their money out of China, propelling a broader rout in emerging market currencies and bringing on a sustained global slump.

And he is not the only one. An increasing number of investors think thetrillions of dollars that went into risky investment opportunitiesin countries like China, Brazil and Turkey are quickly leaving. They think the pace will pick up when the Federal Reserve eventually raises interest rates, leading to plunges in currencies, corporate defaults and a global slowdown.

John H. Burbank III, a longtime emerging-market investor at Passport Capital, a $4 billion hedge fund in San Francisco, has earned stellar returns this year betting on weak commodities, and imploding emerging markets and currencies.

At the root of these investment strategies is the belief that China’s 3 percent currency devaluation was not a one-time event.

These investors think China is experiencing a run on the bank, similar to what happened to Asian countries in 1997 when their semi-pegged currencies collapsed. They also think the country’s $3.5 trillion of foreign exchange reserves will not be enough to prevent a large-scale rout.

In the first quarter of this year, $109 billion left Chinese banks for overseas institutions, according to the Bank for International Settlements, a clearinghouse for global central banks.

China has been at the forefront of the so-called carry trade, in which corporations and countries tap dollar-based lenders and invest the proceeds in higher-yielding assets denominated in local currencies, like real estate, commodities and large-scale investments. As long as interest rates in the United States remain low and emerging-market currencies remain strong, these trades have been highly profitable.

Mr. Hart calculates that the size of the Chinese carry trade is around $2 trillion and as he sees it, the dollars that have flowed into China must flow out again.

China’s foreign currency reserve ratio – in effect its net cash available to defend against speculators – is just a bit over 20 percent, putting it in the neighborhood of countries known to be vulnerable to capital outflows, like Brazil, Turkey and South Africa.

“If there is a run on the currency, everyone will want to turn their yuan into dollars,” said Jurgen Odenius, the chief economist of Prudential Fixed Income. Yuan is a shorthand reference to China’s currency, the renminbi. “And on that basis, China’s foreign exchange reserves do not rank among the stronger countries.”

Still, it is not certain that Mr. Hart’s bet will pay off. The Federal Reserve’s reluctance to increase interest rates could weaken the dollar and take the pressure off China and other emerging-market currencies.

Keep keep on worrying

In Currencies, Economy on 18/09/2015 at 1:28 pm

So the Fed didn’t raise rates: Rather than looking simply at the domestic economy, the Fed is now taking notice of global developments. But that makes it harder for investors to assess which data to monitor and when the Fed will consider the global backdrop has improved. Further volatility is probably ahead.

The good news for mortgagees is that a weaker US$ against S$ may ease the pressure on interest rates. But don’t count on interest rates coming off significantly fast or soon. The trend for SIBOR etc is still upwards.

A hike is still on the table before the end of the year. Fed Chairwoman Janet Yellen said that was still the majority view of the Federal Open Market Committee members – the group responsible for setting US interest rates.

When Fed raises rates, regional currencies will tank

In Currencies, Indonesia, Malaysia on 17/09/2015 at 2:00 pm


Why a Fed rate hike tom is so feared

In Currencies, Economy, ETFs on 16/09/2015 at 10:27 am

The rise in inter-bank rates (which impacts mortgage rates) here is part of the chain effect of fear of a Fed hike. The mkt believes that there is a 28% chance that the Fed rate will go up i.e, 70%8 believes it won’t be raised tom. So if it goes up and markets tank read this

Why financial markets are nervous about Fed’s decision tom (from NYT Dealbook).

INVESTORS HOPE FOR SMALL RIPPLES AHEAD OF FED RATE DECISION On Thursday, the Federal Reserve could increase interest rates for the first time in more than nine years. It may still hold after a violent downturn in global stock markets last month, but this moment has long been dreaded on Wall Street, and investors are hoping it won’t unleash too much turmoil, Peter Eavis writes in DealBook.

History shows that booms financed with cheap money often leave the financial system weaker, not stronger, and the fault lines become obvious when the Fed starts to tighten monetary policy.

In theory, a small increase in interest rates should not be enough to wreak havoc, but some analysts have a darker view of the weak links in the system. They say financial markets have funneled trillions of dollars intoinvestments that will prove unsustainable when interest rates go up.

And the signs of excess are everywhere. Technology companies have been able to raise huge sums even before they tap into the public markets. Debt markets have appeared overly eager to lend. Low interest rates mean investors more willing to buy stocks at historically high valuations and companies are able to borrow money cheaply to buy back their own shares and bolster earnings.

Doomsayers think these activities have continued for so long that companies are more vulnerable to a slight increase in interest rates.

However, even gloomier analysts have predicted a great reckoning for years and it has not yet happened, Mr. Eavis notes. The new restraints on Wall Street and the housing market have so far prevented a resurgence in the toxic real estate lending that occurred a decade ago.

Corporations’ borrowing costs are no cheaper when accounting for inflation. Since the end of 2008, the average, inflation-adjusted yield on corporate bonds of moderate credit risk has been 4.1 percent, compared with 3.94 percent for most of the postwar period.

The Fed’s policies also appear to have prompted a surge in lending that is more stable than the securities markets under higher interest rates. Buybacks are not certain to become less attractive, but if they do, it might prompt executives to invest spare capital in operations in an effort to increase productivity.

Yet fears about the markets themselves remain. High-frequency trading has ballooned over the last decade. Firms using automated trading account for about half of all trades in the market for Treasury Securities. Exchange-traded funds are a major force in the stock market.

E.T.F.s, whose shares are supposed to be closely tied to the value of their underlying assets, have created concerns recently. On Aug. 24, shares in some funds briefly fell to prices well below the value that they would have commanded had they stayed in line with the fund’s underlying holdings. An investor selling at that discount might take an unnecessary loss.

If heavy selling is widespread across many markets, the smooth functioning of these products and markets may be tested.

Why M$ fall should worry

In Currencies, Emerging markets, Malaysia on 15/09/2015 at 1:35 pm

FX reserves

The ringgit lost 20% (ine of the worse performing currencies) of its value against the dollar this year despite Bank Negara spending 29% of its FX reserves to slow the fall. If it had spent less, rinngit would have fallen a lot more.


Don’t laugh at M’sians

In Currencies, Malaysia on 03/09/2015 at 4:18 pm

Markets EM currenciesRinggit has fallen 18% more or less but 11.6% ain;t that great

HoHoHo StanChart goes on a wild sled ride

In Banks, China, Currencies, Temasek on 18/08/2015 at 1:31 pm

FT reports that according to Nomura, half of StanChart’s Asian revenue in the first half of 2015 and less than 10 per cent of HSBC’s came from China proper.

Both “could be in for a rough ride if the swing in China’s currency is the start of a prolonged devaluation

The most obvious effect of a weaker currency is valuation losses on banks’ loans and trading assets in China, which many have used as a bridgehead in the world’s second-largest economy. A lower currency could also spell trouble for customers in China who have borrowed US dollars or euros but are earning renminbi — the “classic FX mismatch,” in the words of Keith Pogson, senior partner of EY’s Asia-Pacific financial services team.”

Western banks also face risks from domestic Chinese counterparts which have borrowed dollars to lend to their own clients. “Asian banks are extremely used to borrowing cheap dollars through interbank markets and then relending it,” said one London-based banker. “In the next couple of years there could be bigger problems if China’s going to carry on devaluing.”

A NEW GLOBAL CURRENCY WAR?/ “Good” news for some

In China, Currencies, Property on 17/08/2015 at 1:10 pm

But the good news for those of us who own Reits and good paying yield stocks is that the Fed may not raises rates in September. Good for those mortgaged to their eyeballs too. But TRE ranters will be upset that the coming collapse S’pore property prices will be again delayed once more. They want their fellow S’poreans to die for supporting the PAP. Ah well hope springs eternal.

China held firm on the value of its money for years, as other countries tried to secure an economic advantage by letting the value of their currencies slide on international markets. Some analysts see its jump into the fray as a new phase in a long-raging global currency war, Peter Eavis writes in DealBook. The plunge paused on Friday, but the renminbi was still down 4.4 percent against the dollar this week, a huge drop for China and the steepest drop since the country’s modern exchange system was set up, Neil Gough reports in The New York Times. The move could leave the United States exposed and undermine efforts to pull the world economy out of the doldrums.

The yen, the euro and several other major currencies have fallen in recent years against the dollar as the Federal Reserve has cut back its stimulus, but the countries that don’t join the devaluations can end up suffering if they export less and import more. A steep drop in the value of the renminbi could also intensify some of the forces that have caused the American economy to underperform.

Analysts also fear the currency tensions could worsen entrenched problems in the global economy, like its reliance on the dollar as a so-called reserve currency. This dependence means that the Fed’s actions can change economic conditions in other countries, and not always for the better.

The Fed now faces a problem. It is considering raising interest ratesfor the first time in more than nine years. A rate increase could drive the dollar up even more aainst other currencies, creating an obstacle to the American economy. It could also make life even harder for countries in the developing world, which could experience capital outflows. Companies in emerging markets that borrowed in dollars would have to spend more of their local currency to pay back their debts.

China, too, would struggle if there was an uncontrolled plunge in the renminbi. Chinese entities have borrowed more than $1.6 trillion in foreign currencies. “A sharp devaluation is not in China’s interest,” said Li-Gang Liu, a China economist at ANZ Research. “That could make corporates very panicky.”

Prolonged turbulence and economic pain may then force world leaders to think hard about whether the international system can be changed, Mr. Eavis writes. The easy money pumped out by the Fed over the last decade helped stoke booms in other countries that became unsustainable. As the Fed has pulled back, the adjustment has been jarring for huge economies, like Brazil and China.

“The system is coming back to bite us in the rear,” said David Beckworth, an associate economics professor at Western Kentucky University. “Maybe this experience teaches us that we are more interconnected than we ever were.”

NYT Dealbook

Holiday in M’sia, Indonesia

In Currencies, Indonesia, Malaysia on 15/08/2015 at 4:54 am

Against US dollar.

Malaysia’s ringgit and Indonesia’s rupiah both slid to 17-year lows, after falls of 2 per cent and 1.4 per cent respectively, while the currencies of India, Colombia, Taiwan, Chile, Vietnam, Turkey, Mexico, Brazil and Singapore all ended the week 1-2 per cent softer. FT

But these currencies depreciate against S$ too.

Great Currency Movement

In China, Currencies on 14/08/2015 at 12:43 pm

From Guardian

Kipper Williams cartoon 13 August 2015

M’sia: Tak boleh? Indonesia not far behind?

In Currencies, Indonesia, Malaysia on 04/08/2015 at 12:59 pm

Asia currencies main

When is holding Reits and dividend stocks is wrong

In Currencies, Financial competency, Reits on 28/07/2015 at 3:03 pm

Those buying bonds, growth and quality stocks and the US dollar will be exposed if the world economy starts going well, for a change.

The thesis secular stagnation has been good for “conservative” investors like me.


“The old order changeth, yielding place to new,
And God fulfils himself in many ways,
Lest one good custom should corrupt the world.

Tharman also from Bizarro S’pore?

In Currencies, Economy, Financial competency, Political governance on 24/07/2015 at 5:26 am

(Or “Weakening economy? Uniquely PAP solution: reverse quantitative easing”)

Let me explain.

The US had a massive quantitative easing (QE, a respectable form of printing money to stimulate the economy) exercise to save the US (and the world from recession) and is now easing back on QE and planning interest rate hikes soon because the US economic is doing But Japan, the Eurozone and China have some form of QE because of worries about their economies.

Our economy is not looking good. S’pore’s economy contracted sharply in the second quarter as manufacturing slumped and is at risk of tipping into technical recession. Price pressures are subdued and expectations are building for the central bank to ease policy once again at a twice-yearly review in October. As S’pore focuses on the exchange rate, not monetary policy. an easing of S$ is called for.

But if anything the S$ could strengthen. S’pore’s plan to launch a savings bond* to encourage long-term retail savings is worrying domestic banks and those like Citi, HSBC, MayBank and StanChart who have big retail operations here, and economists who fear this bond will push interest rates up and suck cash out from an already anaemic economy.

This could cause a flight of cash from bank deposits into these bonds and force interest rates higher as banks compete to attract savers. Higher S$ rates will attract money, strengthening S$.

“Launching a retail savings bond now is almost like reverse QE,” said Chua Hak Bin, an economist with BofA Merrill Lynch here, Reuters reports.

He points to the already slowing deposit growth in the banking system, with just S$3.8 billion (US$2.8 billion) of deposits being added in the first five months of 2015, just 20 percent of the total growth last year.

He suspects the government would invest the savings bond flows overseas** (more money for HoHoHo to double down her bets at the casino***). That would further pressure loan growth, by tightening available cash and triggering a rise in deposit rates, he said.

“So the timing is not ideal. The economy has stagnated in the first half and this will worsen the situation.”

Citibank analysts expect that of a total S$559 billion of deposits in the banking system, 36 percent are savings deposits held by households. If on average the central bank issued about S$6 billion worth of bonds each year, S$30 billion would flow from the deposit base into bonds over five years, they estimate.

MAS Managing Director Ravi Menon played down fears the bond will cannibalise bank deposits.

“The savings bonds issuance numbers pale in significance compared to the total size of the banking deposits,” he said but note that the government says it will issue a maximum of S$4 billion worth of bonds this year, which is still more than a fifth of deposit growth in 2014.

Whatever, down right bizarre this decision to issue the bonds. now. But then a GE is coming.

And the bond is really good for savers. “The Singapore Savings Bond is bending the risk-reward paradigm in investors’ favor,” said Zal Devitre, head of investments at Citibank in Singapore.Government bonds yield about 0.95 percent for one-year and 2.6 percent for 10 years. Bank deposits fetch around 0.25 percent for a year and just double that for 24 months.

Other evidence that Tharman (and Hng Khiang for that matter) are aliens from Bizarro S’pore:

Backgrounder from Wikipedia: The Bizarro World (also known as htraE, which is “Earth” spelled backwards) is a fictional planet appearing in American comic bookspublished by DC comics. Introduced in the early 1960s, htraE is a cube-shaped planet, home to Bizarro and companions, all of whom were initially Bizarro versions of Superman, Lois Lane and their children and, later, other Bizarros including Batzarro, the World’s Worst Detective.

In popular culture “Bizarro World” has come to mean a situation or setting which is weirdly inverted or opposite to expectations.


*The new bond, which will begin selling in October, will have a term of 10 years. It will offer the same yields as government bonds or ten times the returns on bank deposits, and can be redeemed without penalty at any point. They are are aimed at meeting a long-felt need for long-term investment options in the low-yielding economy. “The Singapore Savings Bond is bending the risk-reward paradigm in investors’ favor,” said Zal Devitre, head of investments at Citibank in Singapore.Government bonds yield about 0.95 percent for one-year and 2.6 percent for 10 years. Bank deposits fetch around 0.25 percent for a year and just double that for 24 months. the Monetary Authority of Singapore (MAS), has set a cap of S$100,000 on individual investments in the bond.

**Bizarro bonds: “Guaranteed to lose money for you”

***The late Dr Goh Keng Swee called the stock market a casino.


In Currencies, Emerging markets on 23/04/2015 at 1:26 pm

Ang mohs lose interest in emerging markets i.e. Asean. We’ll suffer the consequences given that our listcos often seen as safe proxies for investments in these places.

Once seen as a necessity in portfolios, investments in emerging markets have lately become less appealing because of messy politics and staggering economies, DealBook’s Landon Thomas Jr. writes. The dollar’s upward climb and the growing acceptance that the Federal Reserve will soon increase interest rates are also causing concern. Now, emerging-market currencies are suffering the consequences. The Turkish lira and the Brazilian real have touched multiyear lows against the dollar and the Russian ruble remains volatile. The Mexican peso and the Indian rupee are also under pressure.

In Brazil, allegations of kickbacks and bribes at Petrobras, the country’s energy giant, threaten to derail the economy, Mr. Thomas writes. In Russia, a war with Ukraine and President Vladimir V. Putin’s erratic ways ‒ along with a collapse in the price of oil ‒ have rattled investors. In Turkey, the country’s president has added to existing currency jitters by suggesting that the head of the Turkish central bank is beholden to foreign speculators because he has not lowered interest rates fast enough. And analysts say there are deeper vulnerabilities in these and other emerging markets that will become more acute as the dollar continues to race ahead.

But while currencies have been volatile, capital flows out of emerging markets have not yet approached the levels of a year ago. According to the Institute of International Finance, the trade group for global banks, global flows into emerging markets nearly halved last month, to $12 billion from $23 billion, with money flowing out of Brazil, Ukraine and Thailand and into Indonesia and India. Since the beginning of the year, investors in the world’s largest emerging-markets investment vehicle, the $38 billion Oppenheimer developing markets fund, have withdrawn just $400 million ‒ an amount by no means indicative of investor panic.

Short S$ long Rupee, US$/ Strong Asean currencies

In Currencies, Emerging markets, India on 23/02/2015 at 12:50 pm

Morgan Stanley is recommending going long on the US dollar against the Singapore dollar, the Thai baht and the South Korean won and a long position in the rupee against the Singapore

Of course MS’s assumption is that US raises rates. Didn’t happen lasy yr when that was conventional wisdom.

But India looks pretty good: As Rivals Falter, India’s Economy Is Surging Ahead Long considered a laggard, India is seeing a lift in its stock market as multinational companies look to expand operations there or start new ones, The New York Times reports.

And according to Credit Suisse, India is a major bet for global EM managers these days. Funds on average hold over 15% of their portfolios in Indian companies, double the benchmark weighting. Gd for them: in USD terms, India’s up 41%

The Indian rupee, the Philippine peso, Thai baht and Taiwanese dollar have strengthened against the US dollar, making repayment of dollar debt easier in these places.

Btw, still long Ascendas India Trust.

Financial markets reflect economic fundamentals this time round

In Commodities, Currencies, Energy, Financial competency on 23/01/2015 at 12:59 pm

This is the view of FT columnist and hedgie Gavyn Davies last week

US$: Huat Ah

In Currencies on 08/01/2015 at 1:40 pm

EURO FALLS LOWER Down the euro goes. On Friday, Mario Draghi, the president of the European Central Bank, said in an interview with a German newspaper that the threat of deflation might force his bank to take more aggressive stimulus measures, which could include buying eurozone bonds in bulk, Landon Thomas Jr. and Jack Ewing report in DealBook. His comments prompted the euro to fall to $1.20, a four-and-a-half year low against the dollar.

The dollar also hit a multiyear high against the Japanese yen, and it was also gaining on the fragile currencies in Brazil, Turkey and Russia.

What does it all mean? The moves highlighted a new trend in world currency markets: Global central banks ‒ along with investors also wary of the low returns that their euros have been delivering ‒ have increasingly been switching into dollars and out of euros, Mr. Thomas and Mr. Ewing write. “The expectation is that a rapidly recovering United States economy will push the Federal Reserve to increase interest rates this year, making dollar-based assets more attractive than those denominated in euros, Japanese yen and emerging market currencies,” they write.

The weakness in the euro on Friday came after Mr. Draghi, in an interview in Handelsblatt of Germany, said, “The risks of not fulfilling our mandate of price stability are in any case higher than they were six months ago.” Investors interpreted Mr. Draghi’s comments to mean that the central bank was moving closer to broad-based purchases of government bonds, possibly as soon as its next monetary policy meeting, on Jan. 22.

S$, Baht & Rupiah looking gd

In Currencies, Indonesia, Japan, Malaysia on 13/02/2014 at 4:43 am

Given that a senior cabinet minister and NTUC chief, and a jnr minister from NTUC is giving the PAP govt a bad name, maybe it’s time to remind S’poreans that the PAP govt is not all full of NTUC clowns. On Tueday I reported that Khaw and MoM Tan had the developers concerned, and today I’ll remind S’poreans that PM’s economic team (headed by Tharman) are keeping int’l investors onside (too bad about TOC, TRe readers, but then they can take comfort that locals like me too like a strong S$.)

(4 Feb) – Recent alarmist commentary may have stirred up concerns about Singapore’s economy, but in the midst of the emerging market rout, safe-haven seekers’ faith appeared unshaken as they scooped up its currency.

“We have noted its safe-haven status within the Asian region is getting stronger in past years. So when you have a broad risk off, in general the Singapore dollar will outperform,” said Ju Wang, senior foreign-exchange strategist at HSBC.

Earlier this week, global markets largely sold off, but the Singapore dollar strengthened, with the U.S. dollar fetching as little as 1.2666 on Tuesday, compared with around 1.2790 Friday. Against the currency of its neighbor Malaysia, the Singapore dollar has touched its highest level since 1998.

But To be sure, it isn’t clear the Sing’s climb is sustainable or would withstand a more extended market rout.

“When people want to take money off the table, the safe-haven tag may not be helpful,” Song said. “We can’t avoid spillover from contagion in Southeast Asia.”

Now that would have TOC, TRE readers happy, ’cause they can blame it on the govt.

BTW, here’s an interesting article on the flows in and out of Indonesia and the other Fragile Five. Actually the rupiah has done relatively better than most other emerging markets currencies against the US$. So has the the Thai baht despite the political problems.

But the currencies of  Thailand Indonesia, M’sia  and the Philippines have fared worse against Japan’s yen than they have against the US dollar. This means that Japanese financial ,institutions may slow down their investments in the region: investing here could be like catching a falling knife. So, they’ll likely wait.


Baer says Nay to S$ in 2014

In Currencies, Economy on 04/02/2014 at 4:27 am

THE one-way bet on the Singapore dollar which had a pretty good run the previous five years is gone, and with foreign investors staying away, expect private property prices to fall 10 per cent in the next 12 months, said Mark Matthews, Bank Julius Baer head of research Asia.

Singapore, the most expensive city in Asia is fast losing its lustre for many expats, noted Mr Matthews.

It is also the seventh-most expensive city to live in the world, while traditional rival Hong Kong is cheaper at 12th place, and Tokyo is a relative bargain at 19th, according to the website Expatistan. (BT on 31st January 2014)

BTW, Baer means bear. So bear mauls horse? TRE, TOC readers will he happy. A weak S$ leads to higher inflation*, leads to higher interest rates, leads to collapsing property market, leads to PAP defeat will be their reasoning.

Related posts

Happy Neigh Year as the Disney channel cartoon characters will say.

*Update at 9.00am on 4 February 2014:

I juz came across this report again, while looking for something else. It was trupeted by ST as a triump by the govt- moderating inflation

It reminded me of an interesting observation juz before CNY. At the Outram MRT stn there is shop selling rice dishes like chicken rice. In mid November when I exited the station, it was selling the dishes at $2 (a price I know it has held for several yrs). When I next passed the stall on 29th January, the price was $2.20.

Inflation moderating? What moderating? To misquote the sleeping co-driver.

S’pore’s & other Asean’s currencies undervalued

In Currencies on 25/01/2014 at 4:34 am

All the Asean’s currencies are undervalued in purchase-parity terms vis-a-vis the US$.

But the S$ is the least undervalued .i.e. its the strongest Asean currency. So if S’pore raises interest rates as TRE posters are calling, money will flood in from the other currencies.  And property prices will fly and the economy tank as exports will be uncompetitive.

Why Thai politics is broken:

Indonesia’s most popular politician in the yr of presidential elections:

The problems facing the PM of Cambodia (BTW, he admires one Harry Lee):

Analysts worried about higher inflation, predict stronger S$

In Currencies, Economy on 16/10/2013 at 4:21 am

Remember ministers jokes on inflation last yr? They told us that we should look on the bright side i.e. inflation excluding COEs as though biz vehicles don’t need COEs.

Wonder why they don’t crack such jokes this yr? Inflation (excluding COEs) not too looking gd for us and govt

From BT 15th October 2013

Coupled with a tight labour market, the central bank said that core inflation – which excludes costs of accommodation and private road transport – is expected to be 1.5-2 per cent in 2013, and rise to 2-3 per cent in 2014. With upside core inflation risks looming, economists from Nomura, Citi, DBS and UOB say that a tightening of monetary policy in April could be on the cards – particularly if prices rise beyond the government’s comfort zone.

Said Nomura analysts in a report: “Overall, the statement should raise market expectations of the MAS shifting towards an even tighter (foreign exchange) policy stance at the April 2014 meeting.”

Added Citi economist Kit Wei Zheng: “Though not our forecast, with the possibility that core inflation may breach the MAS’s implicit 2-2.5 per cent tolerance threshold in 2014, slope steepening in April 2014 cannot be ruled out, especially if growth uncertainties subside.”

Calling such a scenario “definitely possible”, UOB economist Francis Tan said: “It would have to be fuelled by something completely unanticipated, like if oil prices suddenly spike up due to renewed political tensions in the Middle East. Then the MAS will probably move in to tighten the Singapore dollar NEER.”

Ah well S$ will appreciate eve3n more against regional currencies. Gd for S’poreans travelling, not gd for tourists from the region, and for our companies.

Antidote on all the gloom towards Euro

In Currencies on 25/01/2012 at 8:23 am

(Or “Why I keep some small change in Euros”)


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