SGD Monetary Policy Statement : Counting Down Days To The What If ??

Postponing the MPS was a good idea, all the way to the 14th of October just in time for the haze to subside and a less grumpy local market audience as the SG dollar made some decent gains in the week, dragged higher by the IDR and MYR with skeptics keeping its progress in check, preferring to sell the SGD against her two neighbours.

Putting their money where their mouths are is a very good idea but price action in the market suggests otherwise because the truth is that many investors have not come across a single credible analyses of why the MAS should dirty their hands with any action of sort although polls and headlines are screaming for at least a widening of the SGD trading band which has busted its limits several times in the past fortnight, weakening beyond the tolerable 2% zone, depending on whose model one uses.

Thus the bonds rallied as SOR tipped to a 6 week low and the USDSGD fell under 1.40 for the second time in 6 weeks, rounding off a nice double top pattern, sending signals that maybe the market is not so bearish on the SGD as the headlines and polls so indicate. Economic data is really not that bad except for the CPI which is the only troubling aspect of our largely CPI dependent monetary policy.


SGD Monetary Policy Statement : Counting Down Days To The What If ??

The market is expecting that MAS will be “kiasu” as usual and do the pre-emptive strike like they did in January this year when they did an intra-meeting re-centreing, causing much confusion and panic which has not abated all these months as sentiments turned south and confidence waned that MAS was more worried about the economy than the people were and must be holding back on something that the public cannot see. And the USDSGD has not stopped climbing since to its 6 year high, even after the “unchanged” monetary policy statement in April which bought just a few weeks of respite.

From the last time we heard from them in August, the MAS says that monetary policy remains appropriate and has been quiet during the media black out period running into this October’s meeting. We have had a change at the helm of the Finance Ministry since and a new finance minister for Singapore, Mr Heng Swee Kiat, who is also the former managing director of the MAS. The chairman of the MAS is unchanged, Mr Tharman Shanmugaratnam, the former finance minister.

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