Singapore: No MAS easing but sell SGD rally - RBS

Research Team at RBS, suggests that the Monetary Authority of Singapore is due to hold its semi-annual policy review in the week ahead and RBS expects the MAS will keep its neutral slope for the Singapore dollar's path against its nominal effective exchange rate unchanged and also refrain from re-centering its midpoint lower.

Key Quotes

“The latter is only likely to occur when the economy faces recession. But last month Deputy Prime Minister Tharman said GDP growth was likely to be still within the authorities' 12% target range for 2016 albeit at the low end.

We expect Singapore's structural headwinds weak global trade volumes affecting its port, tight macro prudential measures keeping property sluggish, consolidation in the financial sector reducing employment opportunities and stricter immigration controls curbing overall growth to push the economy into recession next year and cause the MAS to re-centre the Singapore dollar's trading band midpoint lower at its April meeting.

Thus we think investors should fade any rally in the Singapore dollar if the MAS keeps policy unchanged in the week ahead.”