Forex Investment and Currency Trading

Expect no change in policy rates in Q2 so long as inflation eases this month. Instead, there will likely be two 50 bp increases in the reserve ratio in Q2 to control liquidity growth resulting from FX intervention. The PBOC will rely more on administrative-based, rather than market-based, measures to target inflation.
After a busy 07H2, the PBOC is expected to largely sit on the sidelines in Q2 and Q3. True, inflation pressures are rising, but the central bank is limited in its ability to curb food price inflation. The PBOC may also take comfort from a stabilizing trade surplus. The [...]

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Singapore will be releasing the advance GDP estimates for Q1-08 and the semi-annual monetary policy statement on 10th April 2008. Even though a technical recession is not expected, the slower growth momentum in certain sectors is likely to see GDP growth moderate. Singapore’s January CPI inflation came in much higher than expected, the highest in nearly 3 decades. While inflation did moderate slightly in February, food and oil related increases still remain significant. However importantly, domestic sources of inflation are also clearly present and these domestic sources cannot be adequately addressed by a strong Singapore dollar (SGD).The Monetary Authority of [...]

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The CNY should appreciate by 10% pace in 2008. But a one-off revaluation looks ever less likely. The authorities are turning increasingly cautious in the face of slower export growth and a stabilizing trade surplus. Inflation is not yet a large enough concern to justify a significantly faster pace of appreciation.
China’s economy is showing signs of cooling. It’s early days, and the economy may yet reaccelerate. But policy tightening and weaker global demand are starting to weigh on growth. China has not decoupled. Exports slowed convincingly in Q4. However, domestic demand is relatively robust as underscored by the strength of [...]

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