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Our model shows that the SGD NEER has eased from +1.5% to +1.3% above the mid-point of its policy band following the Monetary Authority of Singapore (MAS) policy review on July 30, extending its pullback from the record high of +1.9% in late June. The SGD has partially recovered from the USD’s rebound in July, retracing only slightly more than 60% of its losses against the greenback, even as the USD resumed its weakness in August. The limited catch-up likely reflected the official guidance for Singapore’s economy to slow in the second half of the year.
By contrast, the USD’s weakness on Fed cut expectations – triggered by soft US labour data – lifted traditional beneficiaries such as the EUR as the leading anti-USD currency, the AUD as a high-beta risk currency, and the THB, which historically rallied whenever the Fed turned dovish. However, the SGD has gained on currencies with domestic political and fiscal challenges, such as the GBP, IDR, and JPY.
In Northeast Asia, USD/HKD returned into the lower half of its 7.75-7.85 convertibility band as Hibor climbed amid tighter HKD liquidity and capital-flow funding demand. Meanwhile, the CNY appreciated due to stronger policy guidance after the second US-China trade truce paved the way for trade negotiations into early November. Notably, USD/CNY has fallen from the top to the mid-point of its trading band, just as the SGD NEER has retreated from the top of its policy band. Looking ahead, if our call for a third easing of the SGD NEER policy band’s slope at the October policy review proves correct, we cannot rule out the CNY/SGD cross rate breaking above its post-Liberation Day range of 0.1770- 0.1810.
Quote of the Day
“A lie can travel halfway around the world while the truth is putting on its shoes.”
Charles Spurgeon
September 10 in history
The first person fined for drink driving was a London taxi driver in 1894.
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The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.
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