Some interesting currency moves today

[Wd40]

Bank of Japan announced a new stimulus plan today and there were some crazy moves across lots of asset classes:

http://www.livemint.com/Politics/fiGoeE ... rther.html

The yen has fallen to 2%(I was at The arcade today and there was a rush of Singaporeans trying to buy Yens for their holiday, and most the currency changer I was at, ran out of Yens and people had to go dissapointed)

Nikkei was about 5% today

Gold has fallen 2%

Regarding currencies, most currencies went up against the Yen in tandem with the US$.

The SGD has actually fallen today to probably a 2-3 year low against the USD.So even though MAS says that SGD will see mild appreciation, we now know that JPY and EUR have a major weightage in the basket of currencies that SGD tracks and if those currencies fall, which they most likely will, SGD will fall too.

[JR8]

FTSE up 90 at 6550.... I'll take as much of that is as on offer...

[JR8]

So even though MAS says that SGD will see mild appreciation, we now know that JPY and EUR have a major weightage in the basket of currencies that SGD tracks and if those currencies fall, which they most likely will, SGD will fall too.

Of course it will appreciate, it's a managed currency, and that's The Plan. Wouldn't want to leave anything to chance would we...

[Wd40]

FTSE up 90 at 6550.... I'll take as much of that is as on offer...

Probably because now there are hopes that EU will also to do QE similar to Japan

[Wd40]

So even though MAS says that SGD will see mild appreciation, we now know that JPY and EUR have a major weightage in the basket of currencies that SGD tracks and if those currencies fall, which they most likely will, SGD will fall too.

Of course it will appreciate, it's a managed currency, and that's The Plan. Wouldn't want to leave anything to chance would we...

Its managed, that's true, but its managed to stay in a specific range against a basket of currencies( its major trading partners). If free markets were to have its way, the SGD should have appreciated a lot more, but that will hurt exports.

Now that except for the US, its other major trading partner's currencies are weakening so the SGD will weaken as well.

I went to convert some of my left over HKD at arcade today and I was surprised by how much the HKD has appreciated against the SGD in the last 3 months. It is 3%!. All this inspite of what is happening in HK right now. HKD is pegged against the USD, so that explains it.

[JR8]

FTSE up 90 at 6550.... I'll take as much of that is as on offer...

Probably because now there are hopes that EU will also to do QE similar to Japan

Yep, where Japan leads, Europe follows.

Actually that's one thing that frustrates me, the 'hollow-isation' of the FTSE. It takes a bit of morning initiative (triggered by what happened in HK overnight), then gets into a panic by pre lunch-time. Then waits until NY opens for 'permission' to continue either up or down. Trading London these days is like 2nd guessing three markets at once... thank God I'm a LTBH'er rather than an active trader... though I'm currently on 90% margin which provides as much 'fun' as I could ever want... waiting for the point to start reducing that... we'll see!

[JR8]

Its managed, that's true, but its managed to stay in a specific range against a basket of currencies( its major trading partners). If free markets were to have its way, the SGD should have appreciated a lot more, but that will hurt exports.

Now that except for the US, its other major trading partner's currencies are weakening so the SGD will weaken as well.

When I was in the industry here, the S$ was always pegged at MYR2.40. Let's have a look'see .... 2.575 hmm [www.xe.com]

I wonder how much SG spends to manage it's currency down. Can't be cheap.

Might be fun to see a Soros come along and break the peg a la Sterling/ERM peg back in the 90s.... messy.

[Wd40]

http://www.cnbc.com/id/102162759

Its noteworthy how much the SGD has fallen. Just looked at XE.com and the Singer is approaching the 1.3 level against the dollar, a level not seen since very long time. INR and IDR are holding up much better.

[JR8]

Thanks for that link, interesting article. Times like these I'm glad I don't have large amounts of S$ sitting around.

[Strong Eagle]

Thanks for that link, interesting article. Times like these I'm glad I don't have large amounts of S$ sitting around.

It's certainly screwing up my CPF holdings...

[JR8]

Thanks for that link, interesting article. Times like these I'm glad I don't have large amounts of S$ sitting around.

It's certainly screwing up my CPF holdings...

I was thinking along those lines (just didn't want to specifically say). I'd favour anyone here for some time repatriating funds to where your eventual future lies. The markets/regs here are not transparent enough (cough) to give me confidence.

I also do not like managed markets. And the S$ is *completely managed*, on a daily basis, no less, it's almost creepy really.

I don't know if I was in a position to have an enforced CPF fund, and thought of physically leaving what I'd do.
-Get most of it out?
-try and diversify it?

Don't know, but just not leave it at the whim of one man, or two, and his wife who aren't bankers. Probably anything but that. It's all great while all the plates keep spinning.... when the first one fails it's the vote-less FT that'll get slammed.

[JR8]

I think there's a stage of life, when these things are probably just fine. Then there's a later stage when they're not. They're preached as sure, and risk free, but by then your older wiser head should surely know better...

I suppose 'balance of risk' is what it comes down to.... and there's no way I'd leave my future in the hands of a bunch of strangers.

[Wd40]

Atleast CPF gives you decent returns, but those of us who don't have that privilege/burden(depending on how you see it) and still hold SGD lying in banks with 0.1% interest, is not very clever. Especially if your home currency is a high yielding currency.

[JR8]

Atleast CPF gives you decent returns, but those of us who don't have that privilege/burden(depending on how you see it) and still hold SGD lying in banks with 0.1% interest, is not very clever. Especially if your home currency is a high yielding currency.

Well in theory if you made (just say) 11%pa with an INR depo account, and 1%pa with a SGD account, that is because those rates have been derived against the expected future values of those currencies. Broadly speaking (very) the valuation models are indicating that the INR will depreciate 10% (11-1%) vs SGD over the course of the year ahead. So, net net what you end up with after one year is the same.

This is why looking at newspaper ads with dazzling headline payable rates for foreign currency deposits is very much only half of the equation. This is also why say India puts a large chunk of it's individual wealth into gold. That's also why I suggested depositing money in the country 'where your future lies'; as a) that should be the market you know the best, and b) if you convert S$ to INR and buy a house 'back home' to rent out in your continued absence, and to be your home upon your return, you're locking in an asset, generating hopefully a solid income, and the absolute future value matters less (IMHO), though naturally you'd hope that it would rise.


p.s. I understand that only a proportion of what the CPF funds generate as income is returned to the CPF-holders, the rest being retained. And one of the few ways of 'cashing-out' is by quitting/leaving the country.

[sundaymorningstaple]

p.s. I understand that only a proportion of what the CPF funds generate as income is returned to the CPF-holders, the rest being retained. And one of the few ways of 'cashing-out' is by quitting/leaving the country.

If you are a SC you have to give up your SC before you can actually cash out. At this point in time it's only PRs and those who were on EPs back in the '90's who've left it sitting there all these years drawing 4% that are able to withdraw all, lock, stock & barrel along with all the interest.

Should a PR bail out and withdraw, and subsequently in a later year, return and want to re-apply for PR, they have to replace ALL the CPF & Interest withdrawn AND the calculated Interested that would have accrued had it been left in situ all the time from the original date of withdrawal to the date of reinstatement. AND there are still no guarantees that you will regain PR either.