Forex Investment and Currency Trading

Although there has been a marked deceleration in exports and the trade weighted NEER is trading on the strong side of the fluctuation band, market remains confident about further SGD appreciation and forecast end-2008 USD/SGD at 1.35.
Export growth is weak and broadbased, encompassing both the electronics and pharmaceuticals sector. Electronics exports were weak through most of 2007 and the incremental drain is largely due to the poor performance of the pharmaceuticals sector. This is not a business cycle phenomenon; the decline is more due to changes in product mix.
Accordingly, one cannot attribute the poor export performance to currency strength and [...]

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The Monetary Authority of Singapore (MAS) is likely to keep its FX appreciation policy unchanged in its April 10 monetary policy statement. Inflation is higher than expected and 2008 GDP growth is forecast to slow, but should remain within the potential 4-6% range. However, with the S$NEER close to the extreme strong side of the policy band (last at 1.7%), there is limited near-term upside from a reconfirmation of current policy. The risk is for a more significant fall if there is a shift in focus to growth over inflation, and especially from any easing in the slope of appreciation.
The [...]

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Market is perplexed by the magnitude of the SGD appreciation of late, breaking below the key support level of 1.3800.  EUR/CNY and EUR/SGD are nearly identical in trade patterns and there is the thought that the MAS may be waiting to see what the PBOC does with its currency.  There were several rumors that the PBOC was going to be forced to reval its currency lower again to help combat the increased inflationary pressure that the country is seeing…not from the US but from Europe.  The EUR has literally screamed higher against CNY at the same time that Euro-area export growth is [...]

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