http://www.bloomberg.com/apps/news?pid=20601083&sid=a9SWX.N2oC.0
Singapore Dollar to Drop 7.5% on Slump, Goldman Says
March 19 (Bloomberg) -- The Singapore dollar is likely to drop 7.5 percent to S$1.64 versus the greenback over the next three months as a deteriorating economy prompts the central bank to favor a weaker currency, Goldman Sachs Group Inc. said.
The bank cut its estimate from S$1.56 and revised its 2009 gross domestic product growth forecast to minus 8 percent, double the pace of contraction previously projected, Hong Kong- based economist Enoch Fung wrote in a report published today.
“We are factoring in a more protracted downturn into our GDP growth forecast,” Fung said. “The Monetary Authority of Singapore is likely to weaken the SGD by shifting the policy band lower at their next scheduled meeting in April.”
Goldman lowered its 12-month forecast for the currency to S$1.58 from S$1.52. The Singapore dollar recently traded at S$1.5166 against the U.S. currency.
The city-state’s currency has declined 4.9 percent this year, according to data compiled by Bloomberg. That compares with a 10 percent slide in the Korean won, the worst performer among Asia’s 10 most-active currencies excluding the yen.
A quarterly survey by Singapore’s central bank earlier this week saw economists forecasting a 4.9 percent contraction in the economy this year, compared with a prediction for 1 percent decline earlier. Minister Mentor Lee Kuan Yew predicts the economy may shrink as much as 10 percent this year should exports continue to plunge, versus a government projection for a 5 percent contraction.
Highest Exposure
“Singapore has one of the highest exposures to weakness in external demand because of its high ratio of exports to GDP and the high portion of export-driven demand,” Fung said.
UBS AG, the world’s second-largest currency trader, and HSBC Holdings Plc also said Singapore’s central bank will seek a weaker currency at its April policy review. The city’s dollar may fall to S$1.63 in three months, and rebound to S$1.60 by year-end, Nizam Idris, a Singapore-based currency strategist at UBS, wrote in a research report yesterday.
Singapore’s economy will contract 9 percent this year and the central bank “will probably announce a one-off depreciation of its nominal trade-weighted exchange rate when it next meets on April 9 and this is likely to be in the order of 2 percent or so,” wrote Robert Prior-Wandesforde, a senior economist at HSBC in Singapore, in a report today.
Jobless Rate
The unemployment rate rose to 2.5 percent in the fourth quarter of 2008, from 2.2 percent in the previous three months, the Ministry of Manpower reported on March 16. The jobless rate will rise to 7 percent in 2010, hurting private consumption further, Goldman’s Fung wrote in his note.
Singapore’s central bank conducts its monetary policy by guiding the local dollar within an undisclosed band of trade- weighted currencies of major trading partners. It holds its monetary policy meeting twice yearly.
The Monetary Authority of Singapore adopted a faster currency appreciation in October 2007, announced a one-off strengthening in April 2008 and stopped favoring gains in October last year.
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Latest updates at Singapore News Alternative:
1. Forbes: Spore ranked 4th best country for business
2. Goldman Sachs see Spore GDP down 8% in 2009
3. Deals galore as recession hits Singapore
4. RBS to sell Spore retail, commercial banking business
5. China to stop sale of state-owned stakes at cheap prices
6. Speak your language at home: Lee KY
New videos added:
1. Peter Schiff Vlog report - 18 Mar 2009
2. Obama comments on AIG
Singapore Dollar to Drop 7.5% on Slump, Goldman Says
March 19 (Bloomberg) -- The Singapore dollar is likely to drop 7.5 percent to S$1.64 versus the greenback over the next three months as a deteriorating economy prompts the central bank to favor a weaker currency, Goldman Sachs Group Inc. said.
The bank cut its estimate from S$1.56 and revised its 2009 gross domestic product growth forecast to minus 8 percent, double the pace of contraction previously projected, Hong Kong- based economist Enoch Fung wrote in a report published today.
“We are factoring in a more protracted downturn into our GDP growth forecast,” Fung said. “The Monetary Authority of Singapore is likely to weaken the SGD by shifting the policy band lower at their next scheduled meeting in April.”
Goldman lowered its 12-month forecast for the currency to S$1.58 from S$1.52. The Singapore dollar recently traded at S$1.5166 against the U.S. currency.
The city-state’s currency has declined 4.9 percent this year, according to data compiled by Bloomberg. That compares with a 10 percent slide in the Korean won, the worst performer among Asia’s 10 most-active currencies excluding the yen.
A quarterly survey by Singapore’s central bank earlier this week saw economists forecasting a 4.9 percent contraction in the economy this year, compared with a prediction for 1 percent decline earlier. Minister Mentor Lee Kuan Yew predicts the economy may shrink as much as 10 percent this year should exports continue to plunge, versus a government projection for a 5 percent contraction.
Highest Exposure
“Singapore has one of the highest exposures to weakness in external demand because of its high ratio of exports to GDP and the high portion of export-driven demand,” Fung said.
UBS AG, the world’s second-largest currency trader, and HSBC Holdings Plc also said Singapore’s central bank will seek a weaker currency at its April policy review. The city’s dollar may fall to S$1.63 in three months, and rebound to S$1.60 by year-end, Nizam Idris, a Singapore-based currency strategist at UBS, wrote in a research report yesterday.
Singapore’s economy will contract 9 percent this year and the central bank “will probably announce a one-off depreciation of its nominal trade-weighted exchange rate when it next meets on April 9 and this is likely to be in the order of 2 percent or so,” wrote Robert Prior-Wandesforde, a senior economist at HSBC in Singapore, in a report today.
Jobless Rate
The unemployment rate rose to 2.5 percent in the fourth quarter of 2008, from 2.2 percent in the previous three months, the Ministry of Manpower reported on March 16. The jobless rate will rise to 7 percent in 2010, hurting private consumption further, Goldman’s Fung wrote in his note.
Singapore’s central bank conducts its monetary policy by guiding the local dollar within an undisclosed band of trade- weighted currencies of major trading partners. It holds its monetary policy meeting twice yearly.
The Monetary Authority of Singapore adopted a faster currency appreciation in October 2007, announced a one-off strengthening in April 2008 and stopped favoring gains in October last year.
------------------------------------------------------------------------
Latest updates at Singapore News Alternative:
1. Forbes: Spore ranked 4th best country for business
2. Goldman Sachs see Spore GDP down 8% in 2009
3. Deals galore as recession hits Singapore
4. RBS to sell Spore retail, commercial banking business
5. China to stop sale of state-owned stakes at cheap prices
6. Speak your language at home: Lee KY
New videos added:
1. Peter Schiff Vlog report - 18 Mar 2009
2. Obama comments on AIG
