MAS to stop Singapore dollar from rising in surprise easing of monetary policy
The move comes as a surprise as most analysts had expected the central bank to maintain its policy of allowing a modest, gradual appreciation of the Singapore dollar.
Posted 14 Apr 2016 08:18 Updated 14 Apr 2016 15:32
SINGAPORE: The Monetary Authority of Singapore (MAS) said on Thursday (Apr 14) that it will ease its monetary policy by not allowing the Singapore dollar to appreciate.
The move came as a surprise as most analysts had expected the central bank to maintain its policy of allowing a "modest, gradual appreciation" of the Singapore dollar.
"This is not a policy to depreciate the domestic currency, and only removes the modest and gradual appreciation path of the Singapore dollar nominal effective exchange rate (S$NEER) policy band that was in place," MAS said in its half-yearly Monetary Policy Statement.
“The width of the policy band and the level at which it is centred will be unchanged,” it added.
The central bank's announcement sent the Singapore dollar tumbling 0.9 per cent to S$1.3626 against the US dollar as of 8.35am, the biggest fall since November.
MAS manages monetary policy by letting the Singapore dollar rise or fall against an undisclosed basket of currencies of its main trading partners.
Singapore's economy expanded by 1.8 per cent in the first quarter of this year, but growth was flat on a quarter-on-quarter basis in contrast to the 6.2 per cent growth in the previous quarter, according to advance estimates released by the Ministry of Trade and Industry on Thursday.
“The Singapore economy is projected to expand at a more modest pace in 2016 than envisaged in the October policy review. MAS Core Inflation should also pick up more gradually over the course of 2016 than previously anticipated, and is now likely to fall below 2 per cent on average over the medium term,” MAS said.
The MAS last shifted its currency policy to a neutral policy stance of "zero per cent appreciation" in October 2008 during the global financial crisis. It lowered the rate of appreciation of the policy band twice last year, in January and October.
“The actual outcome of S$NEER movements over the six months since October 2015 has in fact been a 'zero per cent appreciation' compared to the preceding six-month period. The cumulative effects of past S$NEER movements and the new policy path will continue to ensure price stability over the medium term,” it said.
"RIGHT POLICY MOVE": ANALYST
A Credit Suisse analyst said the decision was the right move, given the weakening outlook for growth prospects in Singapore.
“We had been arguing that the central bank could have eased more during the last meeting in October, bringing the slope to zero per cent. Instead, it seems that MAS took a more gradual approach, delaying half of the easing then, to add another half now,” said Mr Michael Wan, an analyst for Asia Ex-Japan Economics at Credit Suisse.
Looking forward, front-end interest rates such as the Singapore interbank offered rate (SIBOR), which is used to price home loans, are likely to rise while the Singapore dollar is expected to weaken further, he said.
“However, the extent of the Singapore dollar’s underperformance will also be dependent on Singapore and global risk sentiment, and whether dollar weakness is sustained from here,” he added.
DBS’ senior currency strategist Philip Wee said the outlook for the Singapore dollar against the US dollar will still be dictated by the greenback’s direction against its trade-weighted basket of currencies.
“Looking ahead, we will probably need to pay more attention to the Fed,” he said, adding that two Federal Reserve presidents – John Williams and Jeffrey Lacker – have suggested that the market may be too “dovish” in their expectations for an interest hike.
- CNA/cy
- wong chee tat :)
Showing posts with label dollar. Show all posts
Showing posts with label dollar. Show all posts
Thursday, April 14, 2016
Sunday, June 30, 2013
Dollar firms on Fed official's September easing hint
Dollar firms on Fed official's September easing hint
POSTED: 29 Jun 2013 6:29 AM
The dollar gained ground on Friday after a senior Federal Reserve official pointed to September as the date the central bank could begin winding down its massive asset purchases.
NEW YORK CITY: The dollar gained ground on Friday after a senior Federal Reserve official pointed to September as the date the central bank could begin winding down its massive asset purchases.
The euro fell to $1.3013 around 2100 GMT, down from $1.3038 late Thursday.
The greenback also firmed against the Japanese currency, to 99.11 yen from 98.35 yen Thursday, while the euro rose to 128.99 yen from 128.23 yen.
Kathy Lien of BK Asset Management said the dollar was boosted by comments from Jeremy Stein, a member of the Fed board of governors and the policy-setting Federal Open Market Committee (FOMC).
Stein suggested in a speech in New York that the central bank could make a decision to begin slowing its stimulus program within three months.
Stein specifically cited September in an example explaining that accumulated economic data for the past year, and not just the most recent data, would determine whether the FOMC decides to taper the bond purchases.
That "really got investors excited," she said.
"This specific comment about September sparked speculation that this will be the month when the Fed starts tapering," she said.
The dollar is expected to benefit when the Fed eventually begins to taper the buying, which it has conditioned on continued improvement in the economy.
The dollar slipped a bit against the Swiss currency, to 0.9446 franc from 0.9450 franc.
But it rose against the pound, which bought $1.5202, down from $1.5257 late Thursday.
- AFP/ac
- wong chee tat :)
POSTED: 29 Jun 2013 6:29 AM
The dollar gained ground on Friday after a senior Federal Reserve official pointed to September as the date the central bank could begin winding down its massive asset purchases.
NEW YORK CITY: The dollar gained ground on Friday after a senior Federal Reserve official pointed to September as the date the central bank could begin winding down its massive asset purchases.
The euro fell to $1.3013 around 2100 GMT, down from $1.3038 late Thursday.
The greenback also firmed against the Japanese currency, to 99.11 yen from 98.35 yen Thursday, while the euro rose to 128.99 yen from 128.23 yen.
Kathy Lien of BK Asset Management said the dollar was boosted by comments from Jeremy Stein, a member of the Fed board of governors and the policy-setting Federal Open Market Committee (FOMC).
Stein suggested in a speech in New York that the central bank could make a decision to begin slowing its stimulus program within three months.
Stein specifically cited September in an example explaining that accumulated economic data for the past year, and not just the most recent data, would determine whether the FOMC decides to taper the bond purchases.
That "really got investors excited," she said.
"This specific comment about September sparked speculation that this will be the month when the Fed starts tapering," she said.
The dollar is expected to benefit when the Fed eventually begins to taper the buying, which it has conditioned on continued improvement in the economy.
The dollar slipped a bit against the Swiss currency, to 0.9446 franc from 0.9450 franc.
But it rose against the pound, which bought $1.5202, down from $1.5257 late Thursday.
- AFP/ac
- wong chee tat :)
Friday, April 12, 2013
No change to Singapore dollar policy says MAS
No change to Singapore dollar policy says MAS
POSTED: 12 Apr 2013 8:30 AM
No change to Singapore dollar policy says MAS in view of Core Inflation expected at 1.5-2.5 per cent and ongoing economic restructuring.
Singapore: The Monetary Authority of Singapore is keeping its Singapore dollar policy unchanged at its half-yearly review.
In a release on Friday morning, the MAS said it will maintain its policy of a modest and gradual appreciation path of the Singapore dollar policy band, last set in October 2012.
It said that there will be no change to the slope and width of the policy band, as well as the level at which it is centred.
"This policy stance is assessed to be appropriate for containing inflationary pressures, anchoring inflation expectations, and facilitating the restructuring of the economy towards sustainable growth" said the MAS in a statement.
The move was expected by most economists with an eye on Singapore and the Singapore dollar responded with little change against the US dollar following the release of the central bank's statement.
The MAS also said in its statement that for the whole of 2013, it is lowering it forecast for Core Inflation from 2-3 per cent to 1.5-2.5 per cent, largely due to the weaker-than-expected price increases over the past few months.
The MAS noted that Core Inflation, which excludes private road transport and accommodation costs, receded to 1.5 per cent y-o-y in January-February 2013, from 2.0 per cent and 2.4 per cent in Q4 and Q3 2012..
Over the same period, CPI-All Items inflation averaged around 4 per cent.
- CNA/sf
- wong chee tat :)
POSTED: 12 Apr 2013 8:30 AM
No change to Singapore dollar policy says MAS in view of Core Inflation expected at 1.5-2.5 per cent and ongoing economic restructuring.
Singapore: The Monetary Authority of Singapore is keeping its Singapore dollar policy unchanged at its half-yearly review.
In a release on Friday morning, the MAS said it will maintain its policy of a modest and gradual appreciation path of the Singapore dollar policy band, last set in October 2012.
It said that there will be no change to the slope and width of the policy band, as well as the level at which it is centred.
"This policy stance is assessed to be appropriate for containing inflationary pressures, anchoring inflation expectations, and facilitating the restructuring of the economy towards sustainable growth" said the MAS in a statement.
The move was expected by most economists with an eye on Singapore and the Singapore dollar responded with little change against the US dollar following the release of the central bank's statement.
The MAS also said in its statement that for the whole of 2013, it is lowering it forecast for Core Inflation from 2-3 per cent to 1.5-2.5 per cent, largely due to the weaker-than-expected price increases over the past few months.
The MAS noted that Core Inflation, which excludes private road transport and accommodation costs, receded to 1.5 per cent y-o-y in January-February 2013, from 2.0 per cent and 2.4 per cent in Q4 and Q3 2012..
Over the same period, CPI-All Items inflation averaged around 4 per cent.
- CNA/sf
- wong chee tat :)
Singapore central bank stands pat as economy shrinks
Singapore central bank stands pat as economy shrinks
By Wong Siew Ying
POSTED: 12 Apr 2013 8:31 PM
The Monetary Authority of Singapore says it is maintaining a modest and gradual appreciation of the Singapore dollar, despite the contraction in Singapore's Gross Domestic Product in the first quarter of this year.
SINGAPORE: Despite the contraction in Singapore's Gross Domestic Product (GDP) in the first quarter of this year, the central bank is leaving its tight monetary policy unchanged.
The Monetary Authority of Singapore (MAS) says it is maintaining a modest and gradual appreciation of the Singapore dollar.
"This policy stance is assessed to be appropriate for containing inflationary pressures, anchoring inflation expectations, and facilitating the restructuring of the economy towards sustainable growth," MAS said in its latest half-yearly review of its monetary policy on Friday.
Many economists had expected the MAS to stand pat on its policy.
In the April review of its monetary policy, the MAS said it would continue to allow the Singdollar to appreciate at a modest and gradual pace.
Economists said that apart from fighting inflation, the tight monetary policy will help facilitate economic restructuring.
Credit Suisse's director for non-Japan Asia economics, Robert Prior-Wandesforde, said: "Clearly they are worried about inflation, in particular the tightness of the labour market and the fear that it will lead to higher wage growth and in turn higher inflation. I suspect also that the central bank is trying to force some structuring adjustments in some of these exporting companies - basically, force them further up the value chain into new and more profitable areas."
Some economists say exporters which are not competitive will continue to find the going rough as Singapore's real exchange rate is likely to remain strong.
United Overseas Bank economist Francis Tan said: "Our projection for the (US) dollar-Singdollar at the end of this year is 1.22. However we see that there are some renewed risks in the eurozone. With that, we think that the dollar-Singdollar may possibly go up to 1.26 by the end of the second quarter this year before going on the downward trend towards 1.22 by the end of the year."
Despite the GDP contraction in the first quarter, MAS said the Singapore economy should grow at a modest pace this year, as external demand recovers.
The central bank also cut its inflation forecast for 2013, reflecting weaker price increases in recent months.
Measures to rein in housing costs and car prices should also help keep inflation in check.
For the full year, MAS projects core inflation, which excludes housing and private transportation costs, to come in at 1.5 to 2.5 percent - down from its earlier estimates of 2 to 3 percent.
The headline inflation (CPI-All Items inflation) has also been lowered from 3.5 to 4.5 percent to 3 to 4 percent.
Now that the MAS has downgraded its inflation forecast for the year, some economists say there may be some room for the central bank to loosen its monetary policy in the next review in October.
But a lot will depend on the labour market conditions as well as economic outlook in the latter part of the year.
- CNA/ir
- wong chee tat :)
By Wong Siew Ying
POSTED: 12 Apr 2013 8:31 PM
The Monetary Authority of Singapore says it is maintaining a modest and gradual appreciation of the Singapore dollar, despite the contraction in Singapore's Gross Domestic Product in the first quarter of this year.
SINGAPORE: Despite the contraction in Singapore's Gross Domestic Product (GDP) in the first quarter of this year, the central bank is leaving its tight monetary policy unchanged.
The Monetary Authority of Singapore (MAS) says it is maintaining a modest and gradual appreciation of the Singapore dollar.
"This policy stance is assessed to be appropriate for containing inflationary pressures, anchoring inflation expectations, and facilitating the restructuring of the economy towards sustainable growth," MAS said in its latest half-yearly review of its monetary policy on Friday.
Many economists had expected the MAS to stand pat on its policy.
In the April review of its monetary policy, the MAS said it would continue to allow the Singdollar to appreciate at a modest and gradual pace.
Economists said that apart from fighting inflation, the tight monetary policy will help facilitate economic restructuring.
Credit Suisse's director for non-Japan Asia economics, Robert Prior-Wandesforde, said: "Clearly they are worried about inflation, in particular the tightness of the labour market and the fear that it will lead to higher wage growth and in turn higher inflation. I suspect also that the central bank is trying to force some structuring adjustments in some of these exporting companies - basically, force them further up the value chain into new and more profitable areas."
Some economists say exporters which are not competitive will continue to find the going rough as Singapore's real exchange rate is likely to remain strong.
United Overseas Bank economist Francis Tan said: "Our projection for the (US) dollar-Singdollar at the end of this year is 1.22. However we see that there are some renewed risks in the eurozone. With that, we think that the dollar-Singdollar may possibly go up to 1.26 by the end of the second quarter this year before going on the downward trend towards 1.22 by the end of the year."
Despite the GDP contraction in the first quarter, MAS said the Singapore economy should grow at a modest pace this year, as external demand recovers.
The central bank also cut its inflation forecast for 2013, reflecting weaker price increases in recent months.
Measures to rein in housing costs and car prices should also help keep inflation in check.
For the full year, MAS projects core inflation, which excludes housing and private transportation costs, to come in at 1.5 to 2.5 percent - down from its earlier estimates of 2 to 3 percent.
The headline inflation (CPI-All Items inflation) has also been lowered from 3.5 to 4.5 percent to 3 to 4 percent.
Now that the MAS has downgraded its inflation forecast for the year, some economists say there may be some room for the central bank to loosen its monetary policy in the next review in October.
But a lot will depend on the labour market conditions as well as economic outlook in the latter part of the year.
- CNA/ir
- wong chee tat :)
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