Post MPS – The Silent SGD On A Full Moon Eclipse Night

Seems nobody is really interested in what happened in Singapore yesterday, just like nobody is really interested in the RBA minutes today because only America matters and we all know where we stand.

So I did not manage to find anything on the MAS monetary policy meeting on Asiaone or Straits Times on line today but I would stand corrected because I am quite unfamiliar with the site layouts.

MAS chose again to use a strong SGD dollar to “ward off persistent wage pressures that will push core inflation higher”, I hope that the wages are not being repatriated then, or it will just be another donation to Indonesia or the Philippines or wherever. It is a slight disconnect in my usual cause-effect approach to understanding problems but I understand now that somehow in a convoluted manner, by keeping the SGD dollar strong, we will be able to 1. maintain higher wages, 2. lower import prices and thus, 3. keep inflation contained.

The Business Times did a nice infographic piece to explain to us how the monetary policy works over here.



Notice one thing that I have been harping on for the past 3 years ?

It never ever depreciates ! The Sing dollar is up 36.6% against the USD for the past decade.

My favourite rants.

But I stand by my explanation that higher inflation is actually good for Singaporeans some months back and that it keeps our debt servicing costs down and that is an angle that the Business Times could have missed.

I wrote a few weeks back that with China’s recentreing of the CNY, Singapore could do well to have some form of forward guidance on the exchange rate (that could be re-interpreted into interest rate equivalents).

MAS chose the passive path – to follow the Fed. Because India and Brazil can yelp away but it will not change anything – that America rules most of the world.

Don’t worry if MAS (foreign reserves SGD 343 bio) is ignored, so was RBA today and they are having a worse time than us in a gangster market, that even banks stopped giving too many trade ideas on the AUD to avoid negative publicity in case things go wrong as the currency marches into its 5th week of successive strength, after 10 consecutive weeks of weakness between Oct – Dec last year. There is nothing the RBA (official foreign reserves A$62.2 bio) can do if the speculators decide they want to ramp it up.

aud weekly chart

The world will be paying close attention to Janet Yellen’s speech tonight at 8:45 pm and there is a full moon eclipse going on (actually, just over a couple of hours ago). Janet is a central banker trapped into doing too much because her government is doing too little and she is not paid to supervise the rest of the world even if her policies affect the rest somehow.

We are in the middle of a US market correction and EM market revival, and markets know they have Yellen on a noose because if she screws up and says something wrong and some Walmart guy gets retrenched, there will be hell to pay.

How do you think Walmart guy feels seeing that his bosses are one of the 85 people in the world who are wealthier than the poorest 3.5 billion human beings ?

I think, if he is really smart, he should put his retirement savings into SGD ?


“All Money Is A Matter Of Belief” ~ Adam Smith