MAS to slightly reduce slope of S$NEER policy band to around 0.5 pct at the upcoming semi-annual policy meeting, says Scotiabank

The Monetary Authority of Singapore (MAS) is expected to slightly reduce the slope of its S$NEER policy band to around 0.5 percent from the current 1.0 percent annual pace at the upcoming semi-annual policy meeting, given Singapore’s subdued growth outlook and benign core inflation, according to the latest research report from Scotiabank.

On October 3, Bloomberg reported that Singapore’s economy probably hasn’t slid into recession yet, though the government is monitoring conditions closely and will step in with support measures if needed, citing Indranee Rajah who is minister in the Prime Minister’s Office.

The S$NEER index will likely slide and head for the centerline of the policy band going forward. In the meantime, an annual appreciation of around 0.5 percent in the S$NEER could ensure Singapore’s medium-term price stability particularly as more major central banks are expected to expand their balance sheets once again.

The New York Fed said on October 4 that it will extend its intervention in the repo market into November, with the aim of soothing concerns about a re-emergence of the cash crunch, the report added.

It will continue to offer daily overnight repos for an aggregate amount of at least USD75 billion each through November 4, 2019, in addition to a series of term-repo operations providing loans ranging from six to 15 days.

Earlier on September 12, the ECB announced that it will make EUR 20bn of net asset purchases per month for as long as it takes for the euro zone's inflation and growth outlooks to return to satisfactory levels.

"We would like to sell SGD/IDR cross now at 10,250 now, with a target of 10,000 and a stop of 10,400. Indonesian President Joko Widodo said in an exclusive interview with Bloomberg on October 2 that he will introduce sweeping changes to labor rules by the end of the year and open up more sectors of the economy to foreign investment. It would prompt foreign investors to chase the IDR-denominated assets in our view," Scotiabank further commented in the report.