Some interesting currency moves today

[Wd40]

Couple of Singapore specific news:

http://sbr.com.sg/financial-services/ne ... p-weak-sgd

http://www.channelnewsasia.com/news/bus ... 12688.html

[JR8]

Ouch - the vulnerable little fish-bowl indeed.

[Primrose Hill]

aiyoo

[JR8]

The SBR article is interesting. Here it is published on a non-SGn website (in case of copyright issues etc).
http://customstoday.com.pk/11-of-full-y ... -by-34b-2/
---------------------------------

'11% of full year GDP: Singapore reserves fall by $34b
Reported by: `Customs Today Report
March 14, 2015

SINGAPORE: Singapore is spending billions of reserves to prop up its currency, a report by DBS revealed.
According to DBS, Singapore’s reserves have fallen by US$34 billion since July, a trade-off of keeping the SGD on its appreciation path.

“In six short months, reserves have fallen by the equivalent of 11% of a full year’s GDP. Little wonder the central bank eased back on the appreciation path in late-January, Further easing will be necessary if reserves don’t stop falling,” the report stated.

Singapore is not alone in using reserves to keep the currency strong. China’s reserves have fallen by US$150b, causing the yuan to barely fall against the dollar. Meanwhile, Thailand, Malaysia, the Philippines and Taiwan have all spent the equivalent of 1%-4% of a full year’s GDP just over the past six months supporting exchange rates.
--------------------------------

11%/6 months. So say a rate of 20+% of GDP p.a going towards managing the value of the S$. 'Can this be for real?'

[Strong Eagle]

Makes me think that it is time to withdraw CPF before the exchange rate goes to hell in a handbasket. That kind of reserves outflow cannot be sustained.

Thoughts?

[the lynx]

Makes me think that it is time to withdraw CPF before the exchange rate goes to hell in a handbasket. That kind of reserves outflow cannot be sustained.

Thoughts?

You didn't withdraw your CPF when you left?

[Barnsley]

Makes me think that it is time to withdraw CPF before the exchange rate goes to hell in a handbasket. That kind of reserves outflow cannot be sustained.

Thoughts?

It can if folk are pumping in their CPF money.

[Wd40]

I dont think CPF counts as central banks reserves, because it is local currency.



Here is more info:

http://www.investopedia.com/ask/answers ... ements.asp

[Wd40]

This link shows the reserve position at MAS. I think their reserves had gone up a lot by end of 2013, which they spent away in 2014. Overall the position still looks good comparing last few years. So nothing to worry

http://www.mas.gov.sg/statistics/reserv ... erves.aspx

[JR8]

Makes me think that it is time to withdraw CPF before the exchange rate goes to hell in a handbasket. That kind of reserves outflow cannot be sustained.
Thoughts?

An early indicator might be the ST stock index. Here is a link to a 3 month view/graph.
https://sg.finance.yahoo.com/q/ta?s=^STI&t=3m - Generally pretty benign it seems. No major alarm bells.

Add some momentum indicators and the market has just this week entered a bearish phase it seems - https://sg.finance.yahoo.com/q/ta?s=^STI&t=3m&l=on&z=l&q=l&p=m10%2Cm50&a=m26-12-9&c= - but that could be for greater reasons than the usage rate of reserves alone.

The c20% of GDP figure is nothing short of extraordinary, and it clearly can't go on for ever. Beyond that I'm not informed enough to form an opinion as to what I'd do in your shoes...

[Wd40]

Makes me think that it is time to withdraw CPF before the exchange rate goes to hell in a handbasket. That kind of reserves outflow cannot be sustained.
Thoughts?

An early indicator might be the ST stock index. Here is a link to a 3 month view/graph.
https://sg.finance.yahoo.com/q/ta?s=^STI&t=3m - Generally pretty benign it seems. No major alarm bells.

Add some momentum indicators and the market has just this week entered a bearish phase it seems - https://sg.finance.yahoo.com/q/ta?s=^STI&t=3m&l=on&z=l&q=l&p=m10%2Cm50&a=m26-12-9&c= - but that could be for greater reasons than the usage rate of reserves alone.

The c20% of GDP figure is nothing short of extraordinary, and it clearly can't go on for ever. Beyond that I'm not informed enough to form an opinion as to what I'd do in your shoes...

I was expecting the STI to perform better considering the currency's fall will make Singapore's exports competitive, but no, it looks like the oil and gas sector is really hurting Singapore's exports.

Atleast the European economies are benefiting from the Euro's fall, the CAC is up 17.8% Year to date and DAX is up 20%.

[Strong Eagle]

Makes me think that it is time to withdraw CPF before the exchange rate goes to hell in a handbasket. That kind of reserves outflow cannot be sustained.

Thoughts?

You didn't withdraw your CPF when you left?

No.

a) I want to retain my PR with a REP good through the end of 2017.
b) A solid 4 percent per year return on what is essentially liquid cash.

But, with the exchange rate changes that return is being eroded... and interest is only paid once per yeart.

[Wd40]

I dont know exactly how CPF works but I believe that over a certain amount, you are allowed to invest in equity/bond mutual funds.

Not sure of the exact limit, but a quick read tells me that above $60k you are allowed to invest. You must make use of this CPFIS. Choose mutual funds that are denominated in SGD and invest in good global funds and are FX unhedged, so that any SGD depreciation will not hurt your returns.

http://mycpf.cpf.gov.sg/Members/Gen-Inf ... entSchemes

[Wd40]

Fed meeting tonight. Any guesses, what Yellen is are going to say? Can't wait to see where the US markets end tonight, that will decide the course for all markets at least for the next few days.

[Strong Eagle]

Fed meeting tonight. Any guesses, what Yellen is are going to say? Can't wait to see where the US markets end tonight, that will decide the course for all markets at least for the next few days.

I just don't see any fed rate rises. Why would the US want to do that? The US dollar is strong against most currencies. It is able to sell all the debt it wants at current rates. The economy is definitely not overheated... indeed, there is danger of an oil price based recession. The announcement will be "nothing at this time".