Economists expect moderate drop, given the deepening recession and export plunge By Fiona Chan (http://www.straitstimes.com/STI/STIMEDIA/image/20090331/dollar.jpg) A weaker Singdollar would make exports more attractive, but would also mean that imports and trips overseas for Singaporeans may become more expensive. --ST PHOTO: STEPHANIE YEOWA weaker Singdollar would make exports more attractive, but would also mean that imports and trips overseas for Singaporeans may become more expensive.Last October, the MAS shifted to a policy of zero appreciation in the Singdollar - ending four years of gradual and modest rises in the currency. It has already depreciated about 10per cent against the US dollar since last August and is currently trading at about S$1.52.A Bloomberg poll of 17 economists found that the median forecast is for the Singdollar to fall to about S$1.58 to the US dollar by the middle of the year.Devaluing the currency would ease monetary conditions here and is the logical next step after the Government's expansionary fiscal policy unveiled in January's Budget, said Citigroup economist Kit Wei Zheng.He noted that the MAS appeared to have recently traded the Singdollar at unusually weak levels, perhaps indicating its intention to ease monetary policy by weakening the currency.The MAS conducts monetary policy through exchange rate adjustments, which it carries out by trading the Singdollar within an undisclosed band. And economists estimate that the currency is now hovering near - or even just below - the bottom of the range.A majority predict that the MAS will lower the mid-point of the Singdollar trading band by about 2per cent - although they do not rule out a drop by as much as 4per cent.Read the full story in today's edition of The Straits Times.http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_356730.html
To anticipate a record economic contraction this year, the Monetary Authority of Singapore will adopt a weaker Singapore dollar policy. -- PHOTO: SPHSINGAPORE central bank will adopt a weaker Singapore dollar policy as the government anticipates a record economic contraction this year.In a widely anticipated move, the Monetary Authority of Singapore (MAS) on Tuesday said that it will re-centre the exchange rate policy band at the current level of the trade-weighted Singapore dollar nominal effective exchange rate (Neer).Economists say this acts effectively as a one-off devaluation of the currency. The announcement came against a backdrop of mixed news for the Singapore economy, which the Government said could shrink by up to a record 9 per cent this year, but with exports showing some signs of life in March. The MAS lowered the band in which the Sing dollar trades against a basket of undisclosed currencies, a move analysts say implies a devaluation of between 1 and 3 per cent. It kept its policy stance neutral and the width of the band unchanged.Unlike many other central banks, the MAS uses exchange rate policy rather than interest rate setting as its main monetary policy tool. But with markets anticipating a more drastic devaluation of the currency, the Sing dollar actually rallied on Tuesday, climbing to 1.496 against the US dollar from 1.517 after the announcement, before stabilising around 1.500 later in the day.HSBC economist Robert Prior-Wandesforde said: 'The knee-jerk reaction to this less aggressive than expected statement, was for the US dollar to be sold off against the Sing dollar and for the (Sing dollar) to rally.' The MAS shifted to a neutral exchange rate policy stance last October for the first time since April 2004 when Singapore officially entered into a technical recession.Amid falling exports and lower inflation, some economists expected the central bank to intervene before its policy meeting earlier this month, to make exports cheaper, but the MAS had resisted any interim moves. The last time the MAS lowered its band was in July 2003 during the Sars crisis.In its statement on Tuesday, the MAS said: 'The domestic economy is likely to remain below potential till a decisive recovery is seen in Singapore's export markets...The current level of the (Sing dollar band) is appropriate for maintaining domestic price stability over the medium term.' But the MAS also added that 'there is no reason for any undue weakening of the Singapore dollar' and that 'some moderation in the rate of decline in economic activity around the world is expected following the steep fall since the end of last year' even though 'considerable downside risks to growth remain'. OCBC economist Selena Ling said: 'This is probably to balance out any overly negative sentiment towards the (Sing dollar) following the 2009 official growth forecast downgrade.'
No. the question is .... which currency to invest in for 6-12 mths? anyone have some good advice?
USA wants to export to get out of recession.Europe wants to export to get out of recession.Japan & Korea want to export to get out of recession.Sadly, these countries (who export out) are in direct competition with the Giant Panda..But who has money to buy all these exports.Australia is exporting energy resources, who is NOT buying energy?Australia is in a position where the Panda needs us.. at top dollar deal..There is a saying when Giant Panda produces or exports, the whole world will fall in price.. But when they import, the price will shoot up.. We are in good position mate..
The Monetary Authority of Singapore (MAS) tightened its monetary policy on Wednesday by recentering its Singapore dollar policy band upwards and by shifting its policy to modest and gradual appreciation for the currency. -- BT PHOTO: RICHARD CHNGTHE Monetary Authority of Singapore on Wednesday tightened monetary policy by re-centring the exchange rate policy band upwards, saying it will allow a modest and gradual appreciation of the Singapore dollar.The move comes as the Ministry of Trade and Industry raised its 2010 economic growth forecast for the second time this year and said inflation will accelerate faster than expected, prompting the central bank to join regional counterparts in tightening monetary policy.The Singapore economy is now expected to grow by 7 to 9 per cent this year, said MTI in a statement, from an earlier revised forecast of 4.5 to 6.5 per cent.MAS said it will undertake a one-time revaluation of the Singapore dollar and seek a gradual and modest appreciation of the currency as the Singapore economy has rebounded and inflationary pressures are likely to pick up.MAS has maintained a zero per cent appreciation path for the S$NEER policy band since October 2008. The policy band was re-centred downwards in April last year, and kept at that level during the last policy announcement in October.'This policy stance was assessed to be appropriate, given continuing weakness and uncertainties in global and domestic economic prospects,' said MAS on Wednesday.'MAS will therefore re-centre the exchange rate policy band at the prevailing level of the S$NEER. Further, we will shift the policy band from that of a zero percent appreciation to one of modest and gradual appreciation.''There will be no change to the width of the policy band. MAS will continue to be vigilant over developments in the external environment and their impact on the domestic economy, and stands ready to curb excessive volatility in the S$NEER.'The central bank explained that over the past six months, the S$NEER has fluctuated in the upper half of the policy band, reflecting growing optimism about the strength of the economic recovery in Asia. Meanwhile, the domestic three-month interbank rate has stabilised at a low level of 0.69 per cent since early last year, reflecting the abundant liquidity conditions globally.On the outlook for this year, MAS said the recovery of the Singapore economy has been stronger than expected, and more entrenched since the beginning of this year. Singapore's GDP surged by 32.1 per cent in the first quarter, said the Ministry of Trade and Industry.'The growth was broad-based, with strong performance recorded in the manufacturing and services sectors. With the Q1 expansion, the Singapore economy has now fully recovered the output lost during the recession, and economic activity in a broad range of industries has exceeded its pre-crisis peak. As a result, the economy's output gap turned positive in Q1 2010,' said MAS.MAS expects the economy to 'continue on its firm recovery path given the more favourable global economic outlook'.But it added: 'At the same time, inflationary pressures are likely to pick up, driven by rising global commodity prices as well as some domestic cost factors.'
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Topic: Singapore Dollar - how is it fairing? (Read 13323 times)
