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“The tyrant is nothing but a slave turned inside out.” Herbert Spencer
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Saturday, 30 August 2008 |
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Patricia Lui
Bloomberg
 The Singapore dollar had its biggest monthly drop in seven years, after reaching a record high in July, as concerns about a slowing economy spurred traders to bet that the central bank will rein in currency gains.
Singapore's dollar slumped against the U.S. currency this month as the government cut its 2008 growth forecasts for exports and growth and reported that inflation slowed from a 26- year high in July. The Monetary Authority of Singapore announced a one-off strengthening of the currency to help combat inflation in April and is scheduled to review policy again in October.
"We think there's a good chance that they will change the policy in October though not as aggressively as some are expecting,'' said Chia Woon Khein, a Singapore-based strategist at Royal Bank of Scotland Group Plc. "They might moderate the pace of appreciation, not shift to a neutral stance.''
The Singapore dollar traded at S$1.4143 against the U.S. currency as of 4:54 p.m. local time, little changed from late yesterday, according to data compiled by Bloomberg. It's lost 3.32 percent since the end of July, the largest monthly decline since a 3.39 percent slide in March 2001.
The Singapore dollar will fall 1.1 percent to S$1.4300 in the next one to two months, Chia forecast, adding that the central bank may slow the currency's appreciation on a trade- weighted basis to 3 percent a year from an estimated 4 percent. The currency reached a record $1.3450 per dollar on July 16.
Managed currency
Singapore's central bank conducts its monetary policy by guiding the local dollar within an undisclosed band against a basket of currencies belonging to major trading partners. It adopted a faster pace of appreciation at its October 2007 policy meeting to help curb inflation, which slowed to 6.5 percent in July from 7.5 percent in each of the previous three months.
Slowing growth may be at the forefront of policy makers' minds at the coming meeting.
Gross domestic product rose 2.1 percent in the second quarter from a year earlier, the slowest pace in five years, and the government on Aug. 8 lowered its growth estimate for the year to no more than 5 percent, from an earlier prediction of as fast as 6 percent. Exports are forecast to drop by at least 2 percent, which would be the first decline since 2001.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a9G61T9pYsAg
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Out of university in 1998, I entered the workforce in 1999 fresh with memories of having to work part-time throughout my practice law course. The economy was still feeling the effects of the Asian financial crisis. |
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