We would like to raise your attention to a ‘present and real danger’ regarding the USDSGD situation.
Please refer to our earlier articles on the USDSGD and the Singapore equity market outlook published this month.
Given the continuing positive outlook for Singapore, the considerable inflow of capital coming into the financial markets, strong venture capital, private equity and other M & A activities funded by offshore capital…………all point to the fact that the volume of Singapore Dollars will continue ‘spinning’………..that means inflationary pressures will start building up.
Singapore’s 3 month SIBOR or Singapore Interbank Offer Rate which is the interest rate chargeable to the privileged borrowers has been steadily rising from 1.50% p.a. a year ago to its current rate of 3.65% p.a. MAS has just reverted back to its interest rate policy of; ‘moderately tightening bias’. In other words, we believe MAS is sufficiently comfortable with the rate of growth in Singapore and wants to focus on inflationary pressures.
What this means to the USDSGD is that 1.50 is no longer on the cards, instead, 1.48 which we forecasted for year-end may actually happen sooner………….we suspect probably by June 2007.
If your wealth pie is diversified into a number of currencies besides USD, like EUR, SGD, AUD, then you are alright. In other words, if portions of your wealth pie are invested in EUR or SGD denominated investments, then you have a natural hedge in place.
However, if you have a significant portion of your wealth pie in USD, and you are for all intents and purposes SGD base, then, you need to really think about ‘hedging’ your USD position.
Please talk to your banker or alternatively, please feel free to call us and we will be happy to sit down with you to discuss potential solutions to hedge your personal wealth. We also develop solutions for corporate clients and will be pleased to work with your accountant to hedge your profits from potential erosion.
Please refer to our earlier articles on the USDSGD and the Singapore equity market outlook published this month.
Given the continuing positive outlook for Singapore, the considerable inflow of capital coming into the financial markets, strong venture capital, private equity and other M & A activities funded by offshore capital…………all point to the fact that the volume of Singapore Dollars will continue ‘spinning’………..that means inflationary pressures will start building up.
Singapore’s 3 month SIBOR or Singapore Interbank Offer Rate which is the interest rate chargeable to the privileged borrowers has been steadily rising from 1.50% p.a. a year ago to its current rate of 3.65% p.a. MAS has just reverted back to its interest rate policy of; ‘moderately tightening bias’. In other words, we believe MAS is sufficiently comfortable with the rate of growth in Singapore and wants to focus on inflationary pressures.
What this means to the USDSGD is that 1.50 is no longer on the cards, instead, 1.48 which we forecasted for year-end may actually happen sooner………….we suspect probably by June 2007.
If your wealth pie is diversified into a number of currencies besides USD, like EUR, SGD, AUD, then you are alright. In other words, if portions of your wealth pie are invested in EUR or SGD denominated investments, then you have a natural hedge in place.
However, if you have a significant portion of your wealth pie in USD, and you are for all intents and purposes SGD base, then, you need to really think about ‘hedging’ your USD position.
Please talk to your banker or alternatively, please feel free to call us and we will be happy to sit down with you to discuss potential solutions to hedge your personal wealth. We also develop solutions for corporate clients and will be pleased to work with your accountant to hedge your profits from potential erosion.
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