Chart of the Day: Here’s solid proof that SGD interest rates have fallen sharply
On back of weak loan growth.
The dissipating expectations for a strong USD has sent SGD interest rates plummeting, on back of weak loan growth coupled with a switch by residents from FX to SGD deposits.
According to a report by HSBC, due to its basket FX regime, USD-SGD is more beholden to broad USD movements than other currency pairs.
“A reversal of the QE-fuelled depreciation of the JPY and recovery of the EM/commodity currencies – e.g. MYR and IDR – is putting downward pressure on USD-SGD,” the report noted.
However, the report added that the SGD is likely to underperform those currencies, on valuation and/or yield differential reasons.
“We favour funding Asia FX carry trades out of SGD. A short SGD-IDR trade may also benefit if Indonesia’s tax amnesty program gains traction,” the report noted.
Read Here
Advertise
Sign Up
