Currencies of open Asian economies - including the Singapore dollar - are likely to weaken into the second half of the year as global conditions deteriorate, Nomura said yesterday.
Its foreign exchange research analyst Craig Chan said at a briefing that the Singapore dollar could reach S$1.53 to the US dollar by the end of Q1 2009, and S$1.55 by end of Q2.
According to Bloomberg data, one US dollar would have fetched close to S$1.51 yesterday.
‘With the Singapore economy falling into a deep recession and set to encounter deflation this year...our base view is that the Monetary Authority of Singapore (MAS) will shift its policy mid-point lower at the April policy announcement,’ says Nomura’s report dated Feb 5.
The Government has set Singapore’s 2009 GDP growth estimate at between minus 2 and minus 5 per cent. In an even more pessimistic call, CLSA said last week that Singapore’s economy could shrink 10 per cent.
But the Singapore dollar is nowhere near free-fall relative to the greenback. Mr. Chan expects it to bounce marginally back to S$1.53 per US dollar by the end of the year.
Part of this has to do with a possible weakening of the US dollar at the same time, said Nomura’s global head of foreign exchange research, Simon Flint.
Nomura believes the greenback could suffer as the Federal Reserve aggressively expands its balance sheet to salvage US financial institutions, even as the country’s fiscal position remains delicate.
Nomura also has similar concerns for the sterling, noting that quantitative easing and a more lax fiscal policy have emerged in the UK.
‘We believe capital will be attracted to those countries that are least likely to print money and have solid fiscal positions,’ said the report. ‘For that reason, we recommend selling GBP and USD against a basket of NOK (Norwegian kroner), SEK (Swedish kronor) and AUD (Australian dollars).’
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Sing $ seen weakening against US$ in H2: Nomura
MAS may shift its policy mid-point lower in April
By EMILYN YAP
13 February 2009
Currencies of open Asian economies - including the Singapore dollar - are likely to weaken into the second half of the year as global conditions deteriorate, Nomura said yesterday.
Its foreign exchange research analyst Craig Chan said at a briefing that the Singapore dollar could reach S$1.53 to the US dollar by the end of Q1 2009, and S$1.55 by end of Q2.
According to Bloomberg data, one US dollar would have fetched close to S$1.51 yesterday.
‘With the Singapore economy falling into a deep recession and set to encounter deflation this year...our base view is that the Monetary Authority of Singapore (MAS) will shift its policy mid-point lower at the April policy announcement,’ says Nomura’s report dated Feb 5.
The Government has set Singapore’s 2009 GDP growth estimate at between minus 2 and minus 5 per cent. In an even more pessimistic call, CLSA said last week that Singapore’s economy could shrink 10 per cent.
But the Singapore dollar is nowhere near free-fall relative to the greenback. Mr. Chan expects it to bounce marginally back to S$1.53 per US dollar by the end of the year.
Part of this has to do with a possible weakening of the US dollar at the same time, said Nomura’s global head of foreign exchange research, Simon Flint.
Nomura believes the greenback could suffer as the Federal Reserve aggressively expands its balance sheet to salvage US financial institutions, even as the country’s fiscal position remains delicate.
Nomura also has similar concerns for the sterling, noting that quantitative easing and a more lax fiscal policy have emerged in the UK.
‘We believe capital will be attracted to those countries that are least likely to print money and have solid fiscal positions,’ said the report. ‘For that reason, we recommend selling GBP and USD against a basket of NOK (Norwegian kroner), SEK (Swedish kronor) and AUD (Australian dollars).’
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