Broad money supply accelerates further in February

It ended the month with a 9% growth.

Singapore broad money supply continued its momentum in February, picking up from the 8.7% rise in the previous month to 9%.

According to an economic update by RHB, the pick-up in gains was broad-based.

"Going forward, M3 is expected to grow at around its current rate in the next few months, supported by expectations of further US Federal Reserve rate hikes and an improving export outlook," noted RHB.

However, things may take a different turn in the latter part of the year. According to RHB, things may soften as supply continues to outpace loan growth by a wide margin, hinting at elevated amounts of hot money.

To recall, bank lending expanded 3.5% year-on-year in February, backed by rising loan demand from both the commercial and consumer segments.

With this, money supply is expected to expand 5.6% this year, from 4.2% in 2016.

"We do not expect the Monetary Authority of Singapore (MAS) to ease the slope of the SGD nominal effective exchange rate (S$NEER) band in April 2017. Instead, the Government would likely monitor the current situation and step in with soft loans for essential industries if the need arises," said RHB.

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