By Roushni Nair
(Reuters) –
Investors turned bullish on the Singapore dollar for the first time since mid-December, a Reuters poll showed on Thursday, as the city-state’s economic growth and inflation momentum continued to support the currency, while bearish bets on most Asian currencies weakened.
Long positions in the Singapore dollar have reached their highest level since early April 2023, while bearish bets on the Malaysian ringgit have fallen to levels seen in April last year, according to a two-week survey of 10 analysts.
The Monetary Authority of Singapore (MAS) is in no hurry to ease monetary policy after core inflation topped 3% in May and growth in the second quarter was 2.9%, analysts said.
The MAS will conclude its monetary policy meeting on Friday. Analysts expect the central bank to maintain its hawkish stance and maintain its current monetary policy guidelines, even as inflation hit a two-year low in June.
“Solid data (growth and inflation) and continued appreciation of the SNEER (nominal effective exchange rate of the Singapore dollar) continue to value SGD in the context of relative value and against low-yielding bonds in the region,” Bank of America analysts said in a note.
However, any rise in oil prices due to geopolitical events will put upward pressure on the Singapore currency’s safe-haven status, they added.
Singapore is one of the few countries in the world with a AAA credit rating, reflecting an exceptionally sturdy fiscal and external balance sheet, reinforcing its position as a sheltered haven for investors.
Meanwhile, markets have priced in a 100 percent probability of a US Federal Reserve rate cut as early as September, with investors awaiting a series of macroeconomic data releases, including second-quarter growth figures, that could confirm their observations. [FEDWATCH]
Falling US interest rates would weaken the dollar as it could lead to reduced foreign investment while at the same time triggering a risk-on bias towards Asian emerging market currencies.
This also resulted in significant weakening of miniature positions in the Philippine peso and Thai baht.
Bearish positions against the Chinese yuan and Taiwan dollar reached their highest level since June 27.
Taiwan markets continued to fall, under pressure from statements from Washington last week that suggested the possibility of more restrictions on exports of advanced semiconductor technology to China.
Taiwan markets were closed for a second straight day due to bad weather.
The Asian Currency Positioning Survey focuses on analysts’ and fund managers’ views on the current market position of nine Asian emerging market currencies: the Chinese yuan, South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit and Thai baht.
The survey uses estimates of net long and net miniature positions on a scale of minus 3 to plus 3. A score of plus 3 indicates the market is significantly long U.S. dollars.
These figures include positions held via non-deliverable futures (NDF) contracts.
The survey results are presented below (position in US dollars against individual currencies):
DATE USD/SG USD/ID USD/IN USD/TH
DRRB
25-Jul-24 1.07 0.79 -0.33 0.35 0.86 0.12 0.39 0.43 0.02
11-Jul-24 1.05 0.87 0.06 0.73 0.68 0.22 1.03 0.86 0.51
27/06/24 1.34 1.28 0.80 1.49 0.88 0.46 1.00 1.37 0.91
13/06/24 0.95 0.87 0.62 1.22 0.64 0.37 1.00 1.23 0.92
30/05/24 1.05 0.72 0.33 0.94 0.53 0.00 0.81 1.19 1.00
16/05/24 1.05 0.96 0.35 0.96 1.02 0.39 1.23 1.29 1.00
2-May-24 1.25 1.61 0.89 1.39 1.40 0.49 1.46 1.44 1.39
18-Apr-24 1.25 1.59 0.80 1.32 1.24 0.43 1.42 1.19 1.28
4-Apr-24 1.18 1.09 0.42 1.13 1.17 0.00 1.15 0.62 1.35
21-Mar-24 0.92 0.82 0.33 0.60 0.92 -0.54 1.12 0.47 1.13
