uyen

Singapore's dollar may be an "attractive" currency to fund carry trades as interest rates fell below those of the Taiwan dollar, previously widely borrowed to pay for higher-yielding assets, Citigroup said.
Singapore's benchmark interest rate for lending fell to 2.5 percent from 3.4 percent at the start of this year. That is lower than Taiwan's 3.125 percent, making it cheaper for investors to borrow Singapore dollars to take advantage of other currencies with higher yields.

The Monetary Authority of Singapore uses its dollar, rather than interest rates, to guide the economy and control inflation. That means the central bank will buy or sell the currency to keep it stable for economic growth, according to Chua Hak Bin, an economist at Citigroup.

"What is nice about the Singapore dollar is that the monetary policy is centered around the exchange rate and the MAS steps in to curb the volatility," Chua said.

"That insurance element is quite critical." Japan's yen and the Taiwan dollar are the two worst performers of the 16 most-active currencies this year as traders borrowed them to fund purchases of higher-yielding securities. The yen has dropped 2.5 percent against the US dollar and Taiwan's currency fell 0.7 percent.

The Bank of Japan on July 12 kept its key overnight lending rate at 0.5 percent.

The Singapore dollar, which closed yesterday at S$1.5157 (HK$7.81) against its US counterpart, has risen 1percent this year. The island's currency may gain to S$1.50 by the end of 2007 and climb to S$1.47 at the end of June 2008, Citigroup forecasts.

Singapore's dollar is also less volatile than the yen, making it a better currency for the carry trades, Chua said.

"The lower volatility reduces the risk of using the Singapore dollar as a funding currency." BLOOMBERG

source: http://www.thestandard.com.hk/news_d...d_str=20070717

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djchris

After chatting with some forumers from another forum, I learnt that SGD would be a good currency to hold for now due to the economy. It should appreciate further.

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wenchong1985

i thought shld be china or india currency is the best, keep them for 10 years, the value sure go up by 1 times one...

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id_peace

I hope that it would appreciate against the british pound so that it would cost much lesser

genzo2106

seems like now our SGD is really growing stronger..Hope that it will not go up by too much thou till inflation gets too high. But it would be an advantage to us to exchange it for other weaker currencies when travelling abroad:mellow3:

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gundam916

Well... it may not really be a good thing that our Sing $ gets too strong... Although it will mean that with a stronger Sing $, buying things from other countries much more cheaply... it may eventually lead to imported inflation; similarly, our exports may drop (as it's now more expensive than before...) Unless the economy grows at a much faster rate than the inflation rate, it will actually be more harmful for us in the long term.... :shifty3:

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