SGD

[winston]

FXNEWS-Time to buy Singapore dollar on dips -SEB

It's time to buy Singapore dollar , which had fallen in recent sessions but could resume its uptrend as it remains a policy tool to fight inflation, analysts at SEB say in a note.

"With the recent and what we believe to be temporary reaction in the U.S. dollar we have seen a move back to attractive entry levels for a short U.S.dollar/Singapore dollar position." They recommend buying Singapore dollar at current levels with a stop at 1.3950, targeting an initial move to 1.34. The currency hit a one-month low of 1.38 on Thursday.

[HengHeng]

ok la not bad assuming USD continues to weaken

[winston]

FXNEWS-Singapore dollar hits 5-week low vs USD

Singapore dollar falls to a 5-week low at 1.3818/USD as investors rush to cover their short positions on the U.S. dollar as it firms broadly.

"Sentiment is likely to be affected by the dollar's rise versus the ringgit and Asian FX in general," says a trader.

Singapore dollar has lost 2% since it hit a record high of 1.3468 on April 23. But most analysts still expect it to resume its uptrend as the government tries to tame inflation.

[kennynah]

in the long haul, i dont see singapore dollar hanging around 1.3+ region....too strong for singapore and we are not a natural resource country...and since we are primarily an export, service oriented nation, we cannot afford such a high valued $dollar...unless other regional countries maintain a high fx to usd as well...

to go back to 1.7 region is unthinkable as well... maybe in the region of 1.5 or thereabouts ....long term long term...not tomorrow nor end of 08, probably 2009/10 time frame...

[HengHeng]

Basically i believe SGD will devalue when commodity prices subside from present prices. A higher SGD at the moment helps to suppress the higher food and oil prices.

Come 2009~10 we might see SGD coming down as IR completes and a lower SGD would attract tourism and probably when high oil/food prices corrects itself.

[sesdaqfan]

Guys,
Can take a look at USD/SGD as it has broken out of the range.

[winston]

From ishak with thanks:-

Worst slump in 7 years for S$
TodayOnline, 30 Aug 2008

The Singapore dollar has seen its biggest monthly drop in seven years, after reaching a record high in July, as concerns about a slowing economy spurred traders to bet that the Monetary Authority of Singapore (MAS) will rein in currency gains.

The Singapore dollar slumped against the US dollar this month as the Government cut its 2008 growth forecasts for exports and growth and reported that inflation slowed from a 26-year high in July. In April, the MAS announced a one-off strengthening of the currency to help combat inflation and is scheduled to review the policy in October. But this has had the negative side-effect of making Singapore’s exports comparatively more expensive.

“We think there’s a good chance that they will change the policy in October though not as aggressively as some are expecting,” said Royal Bank of Scotland strategist Chia Woon Khein. “They might moderate the pace of appreciation, not shift to a neutral stance.”

In late Asian trade, the Singapore dollar traded at $1.4143 against the US dollar. It’s lost 3.32 per cent against the greenback since the end of July, the largest monthly decline since a 3.39-per-cent slide in March 2001. The Singapore dollar reached a record $1.3450 on July 16.

Ms Chia forecasts the Singapore dollar will fall a further 1 per cent in the next one or two months.

The MAS’ policy is to guide the dollar within an undisclosed band against a basket of currencies belonging to major trading partners.

It adopted a faster pace of appreciation at its October meeting last year to help curb inflation, which has since slowed to 6.5 per cent in July from 7.5 per cent in each of the previous three months.

[winston]

Aberdeen, Daiwa SB Sell Singapore Dollar as MAS Meets By Lilian Karunungan

Oct. 3 (Bloomberg) -- Daiwa SB Investments Ltd. and Aberdeen Asset Management Asia Ltd. are selling Singapore dollars on speculation the central bank will curb the currency's advance as the economy teeters on the brink of recession.

The Monetary Authority of Singapore will slow the pace of appreciation at its biannual foreign-exchange policy meeting on Oct. 10, according to seven of 14 strategists surveyed by Bloomberg News. Four expect gains to be halted, two expect a shift down in the range for the currency's moves and only one predicts no change.

Investors are reducing their holdings in Singapore after exports fell for a fourth month in August, the number of tourists dropped the most since 2003, and the city-state's gross domestic product contracted in two of the three quarters through June. Singapore's benchmark stock index is down 33 percent in 2008, headed for its biggest annual decline so far this decade.

``I reduced exposure to the Singapore dollar,'' said Kei Katayama, a senior fund manager who heads the foreign fixed- income group in Tokyo at Daiwa SB Investments, a unit of Japan's second-largest brokerage with $4 billion in non-yen funds. ``The U.S. slowdown is spreading to Asia and Europe.''

Singapore's central bank, with about $170 billion of reserves, uses the exchange rate instead of interest rates to control monetary policy. The local dollar is allowed to trade within an undisclosed band against a basket of currencies of the city's major trading partners.

Economists See Recession

MAS policy makers opted for a one-time strengthening of the Singapore dollar at their last meeting in April, when inflation was running at a 26-year high of 7.5 percent. The rate dropped to 6.4 percent in August, easing pressure on the central bank to use currency gains to keep import costs in check.

The currency weakened 7.1 percent, to S$1.4478 per dollar as of 12:20 p.m. in Singapore, from a record high of S$1.3450 on July 16, partly reflecting the greenback's 15 percent rally against the euro and 7 percent gain versus the Malaysian ringgit. The Singapore dollar declined 6.3 percent since the central bank last met on April 10, after rising 8 percent from the previous policy decision.

Analysts predict gains will be limited. The local currency will trade at S$1.43 per U.S. dollar at the end of March, according to the median forecast of 21 estimates in a Bloomberg survey.

DBS Group Holdings Ltd. and United Overseas Bank Ltd., the nation's two-biggest lenders, said Singapore probably slipped into recession in the third quarter for the first time since 2002. The government will release advance estimates for economic growth on the same day that MAS issues its policy statement.

Zero Appreciation

Electronics account for about 29 percent of manufacturing and financial services make up 12 percent of the economy, government figures show. GDP dropped 6 percent in the second quarter from the previous three months, the statistics office said on Aug. 11.

The economic data ``makes us far less positive on the currency when taken together with the fact that inflationary pressures are easing,'' said Kenneth Akintewe, a money manager at Aberdeen Asset Management in Singapore, with $9.6 billion in Asian fixed-income assets.

The MAS may slow currency gains this month and then move to zero appreciation at its April meeting, said Thomas Harr, the senior currency strategist in the city at Standard Chartered Plc, which earns three-quarters of its profit in Asia.

The last time the central bank halted gains was in 2003 when the spread of the deadly severe acute respiratory syndrome virus, or SARS, brought the economy to a standstill and inflation slowed to less than 1 percent.

Inflation Too Fast

Inflation is too fast for the central bank to stop the advance, said Mark Tan, a Hong Kong-based economist at Goldman Sachs Group Inc.

``If you look at previous episodes when they reduced all the way to zero, inflation was running below 1 percent so it's a much different scenario right now,'' he said.

Goldman Sachs estimated in August that half of the world economy faces recession, with richer nations faring the worst.

``Singapore is more exposed because it not only has a huge financial sector, it's also a very open economy,'' said Standard Chartered's Harr.

The pain is apparent in Singapore's real estate. Home prices fell for the first time in more than four years in the third quarter. Shares of CapitaLand Ltd., the nation's largest developer, slumped to a three-year low this week.

`Prolonged Slump'

Zeng Yushan, 24, an agent at HSR Property Consultants Pte, Singapore's biggest real-estate agency, said she's struggling to find buyers for luxury apartments.

``I used to sell last year four to five properties a month,'' said Zeng. ``I can now only close one a month or none at all.''

The outlook may prompt the central bank to opt for zero currency appreciation this month, known as a neutral position, according to Kit Wei Zheng, a Singapore-based economist at Citigroup Inc.

``There's a good chance we may be entering a deeper and more prolonged slump than what many people have been expecting,'' said Kit.

[winston]

The Singapore dollar is set to weaken sharply to S$1.80 against the U.S. dollar within the next year, Morgan Stanley has predicted, from current S$1.507.

[blid2def]

The Singapore dollar is set to weaken sharply to S$1.80 against the U.S. dollar within the next year, Morgan Stanley has predicted, from current S$1.507.

Folks' views on this? I've no opinion on this topic as economics isn't my strong suit.