Singapore consumer prices declined by 0.1 pct YoY in October of 2016, compared to a 0.2 pct drop in September while market expected a flat reading. It was the 24th straight month of decrease and the smallest fall in two years.

One of the key drags on the CPI has been the effect of a correcting property market, with private accommodation inflation sliding through much of the last three years as occupancy rates hit cycle lows. Compounding this drag are persistent supply-side disinflation and limited domestic corporate pricing power.

We forecast a gradual CPI rise into Q1’17, and our measure of disinflation pressure across the CPI basket suggests that sequential price moves are already stabilizing across the majority of categories.

Consumer prices account for a mainstream of general inflation and this is imperative for currency valuation as the growing prices likely to lead the central bank to raise interest rates out of respect for their inflation containment mandate.

As a result, you could now see the Singapore dollar has lost almost 7% in just last four months as USDSGD is trading at 9-months highs of 1.4275 levels, the steep gains from the lows of 1.3347 levels to confirm the major bullish trend.

While Singapore recorded a trade surplus of 5.16 SGD billion in October of 2016, while on the data front, it is lined up to announce PMIs on December 2nd and consumer prices on 1st December.

Singapore Telecommunications Ltd. excluding regional associates, the group’s companies have foreign-currency borrowings "hedged into the functional currency of the respective borrowing entities,” said Lim Cheng Cheng, chief financial officer at the Singapore-based phone company, which derives over three-quarters of its revenue overseas, including in Asia, Australia, and Africa.

“We have in place a euro medium term note bond program which enables us to tap various bond markets based on our funding plans,” sources say.

As an example, in October this year, they mentioned that they issued a $500 million bond at a coupon of 2.375 pct, and this has been hedged back to Singapore dollars. Hence, from a debt management perspective, the impact of a rising U.S. dollar is not significant.