British Prime Minister Theresa May is expected to make a final attempt at persuading lawmakers to back her "new" Brexit deal on Wednesday but the agreement — and May's...Europe Politicsread more
Consumers in China are taking to social media to express their support for Huawei as the U.S. government looks to ramp up pressure on the Chinese smartphone maker.Technologyread more
Tensions between the two parties have heightened in recent months as the campaign for seats in the Brussels and Strasbourg-based parliament has crescendoed.Europe Politicsread more
Shares of Saudi shopping mall operator Arabian Centres were trading at 24.34 riyals ($6.49) in early deals in Riyadh.IPOsread more
There is at least one thing in common between the U.S. and Russia – their willingness to weaken the European Union, a top EU official said.Politicsread more
U.S. President Donald Trump's latest tariff increase — and Beijing's plans to counter them — are hitting U.S. companies in China, according to a joint survey this month by...China Economyread more
"We are also constantly watching whether the trade war will turn into a tech war," Ma said Tuesday, according to a CNBC translation of his Chinese remarks published by a locak...China Economyread more
TransferWise, the money transfer start-up, was valued at $3.5 billion after investors bought $292 million of shares in a secondary sale.Technologyread more
Indian Prime Minister Narendra Modi's likely return to power for a second term will likely be positive for his country's growth, according to economists and investors.Asia Economyread more
Kohl's, J.C. Penney and Nordstrom release disappointing earnings news, putting a damper on their sector.Retailread more
"Pretty much the entire suite of apps that 'talk' over the internet could be vulnerable," said Tom Uren, a senior analyst at the Australian Strategic Policy Institute's...Cybersecurityread more
The slumped 5 percent against the U.S. dollar in 2014, and strategist expect more of the same ahead, forecasting a decline of up to 5 percent by year-end.
The currency still looks overvalued, says Joey Chew, senior Asian FX strategist at HSBC, citing Singapore's weak underlying economic fundamentals: sluggish domestic demand, disinflation and low productivity growth.
"Its resilience is also unsustainable against the backdrop of escalating global currency tensions. While most major central banks are directly or indirectly weakening their currencies, the MAS (Monetary Authority of Singapore) stands in stark contrast for officially targeting currency appreciation," Chew wrote in a report published on Monday.
As such, Chew expects the MAS will allow the Singapore dollar nominal effective exchange rate (NEER) – which represents the relative value of a currency compared to other major currencies being traded – to drop to the bottom of the band in 2015. This can happen by the MAS easing its U.S. dollar-selling interventions.
The MAS, Singapore's de facto central bank, uses an undisclosed trade-weighted basket of currencies to set a band within which the Singapore dollar trades. Since April 2010, it has guided appreciation against the currency basket.
It has favored a stronger currency in order to manage inflation and facilitate economic restructuring in order to weed out cost-ineffective businesses and free up resources for higher value-added ones.
To ease or not to ease?
While not her base case, Chew - who forecasts the currency will fall to 1.40 against the U.S. dollar by year-end - isn't ruling out monetary policy easing either.
"If the MAS considers easing monetary policy at its April meeting, it could widen the policy band [to ±3 percent from ±2 percent]," she said.
The MAS last widened the band in October 2010, citing "volatility across international financial markets" as its motivation.
Nizam Idris, head of foreign-exchange and fixed-income strategy at Macquarie Group, is less bearish on the outlook for the Singapore dollar.
The currency may fall to around 1.36-1.37 during the first quarter on a strengthening U.S. dollar and speculation around MAS easing, Idris said. But, it is likely to reverse its downtrend starting in the second quarter, he added.
This will be driven by two factors: the greenback will pare some of its gains as the market re-prices expectations for Federal Reserve tightening and the MAS will stand pat on monetary policy.
"From speaking to MAS in the past, they are keen to send a message of stability at a time when economic reform is going on," Idris said. "The whole idea of economic reform is that fiscal policy takes center stage while monetary policy remains stable."