October 14, 2016 / 2:27 AM / 9 months ago

EM ASIA FX-Singapore dollar back near 7-mth low as Q3 GDP contracts; baht up

4 Min Read

* Singapore dlr briefly up after MAS stands pat
    * Baht gains on hopes for calm after king's death

    By Jongwoo Cheon
    SINGAPORE, Oct 14 (Reuters) - Singapore's dollar quickly
gave up early gains and sank to near seven-month lows on Friday
after the trade-reliant economy unexpectedly contracted in the
third quarter.
    Though the city-state's central bank kept policy unchanged
as expected earlier in the day, the disappointing GDP reading
and gloomy global outlook kept market expectations for future
easing alive.    
    The Thai baht rose on hopes for calm after King
Bhumibol Adulyadej, the world's longest-reigning monarch, died
on Thursday. 
    The Singapore dollar briefly firmed after the
central bank left policy unchanged, but then eased as much as
0.4 percent to 1.3865 per the U.S. dollar, similar to Thursday's
low of 1.3869, its weakest since March 10.
    The economy shrank 4.1 percent in July-September on a
seasonally adjusted annualised basis from the previous three
months, defying the median forecast of a 0.3 percent growth.
 
    Despite the disappointing economic data, the Monetary
Authority of Singapore (MAS) kept the width of the policy band
and the level at which it is centred unchanged, maintaining the
rate of appreciation of the Singapore dollar policy band at zero
percent. 
    Traders said the Singapore dollar briefly firmed after the
decision as some investors had unwound bets on easing, but
investors quickly took the rebound as a chance to sell.
    "If global macro and price pressures deteriorate
precipitously in the intervening months to April 2017, we would
lean towards a re-centring lower," said Emmanuel Ng, foreign
exchange strategist at OCBC Bank, in Singapore.
    "The disappointing Q3 GDP and somewhat dovish overtones in
the policy statement may leave the USD/SGD looking for further
hard room on the upside if broad USD resilience re-emerges," Ng
said.
    OCBC Bank retains its tactical objective for the Singapore
dollar at 1.4040 against the greenback, he added.
    The MAS reviews its exchange-rate based monetary policy
twice a year, in April and October. It surprised markets by
easing in April.
    It manages monetary policy by changes to the exchange rate,
rather than interest rates, letting the Singapore dollar rise or
fall against the currencies of its main trading partners because
trade flows dwarf the city state's economy.

    CURRENCIES VS U.S. DOLLAR
    Change on the day at 0131 GMT
  Currency                 Latest bid   Previous day  Pct Move
  Japan yen                    103.85         103.72     -0.13
  Sing dlr                     1.3841         1.3815     -0.19
  Taiwan dlr                   31.666         31.760     +0.30
  Korean won                  1128.90        1135.90     +0.62
  Baht                          35.10          35.55     +1.28
  Peso                         48.280         48.340     +0.12
  Rupiah                        13040          13075     +0.27
  Rupee                         66.93          66.93     +0.00
  Ringgit                      4.2035         4.2110     +0.18
  Yuan                         6.7223         6.7256     +0.05
                                                              
  Change so far in 2016                                       
  Currency                 Latest bid  End prev year  Pct Move
  Japan yen                    103.85         120.30    +15.84
  Sing dlr                     1.3841         1.4177     +2.43
  Taiwan dlr                   31.666         33.066     +4.42
  Korean won                  1128.90        1172.50     +3.86
  Baht                          35.10          36.00     +2.56
  Peso                          48.28          47.06     -2.53
  Rupiah                        13040          13785     +5.71
  Rupee                         66.93          66.15     -1.17
  Ringgit                      4.2035         4.2935     +2.14
  Yuan                         6.7223         6.4936     -3.40
 
 (Reporting by Jongwoo Cheon; Editing by Kim Coghill)

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