Singapore’s MAS likely to change SGD NEER policy band during April meeting

Singapore's Retail sales were better than expected facilitated by more car purchases as car quota costs lowered. November ex-autos sales dropped 2 percent, suggesting weaker discretionary demand amid a 4.8 percent tumble in stock values. Phones and PCs sales dropped -8.2 percent Y/Y, while recreational goods and watches & jewellery also decreased -6.9 percent and -2.2 percent respectively. Auto sales rose 59.7 percent Y/Y, spurred by low COE prices.

Drop in China's stock markets and volatility in regional currencies slowed the tourist led retail sales in Singapore. Further, the trend increase in SOR and SIBOR interest rates is likely to reduce discretionary purchases.

Retail sales are seen strengthening due to tight labour market and steady wage growth. An increase in value consciousness is expected to shift consumption to mass retail events and online. Rising online trend in the reselling of consumer durables might weigh down the store sales.

"In any case, with oil prices lower amid greater growth headwinds, we now see increasing risk to our call for the MAS to maintain its SGD NEER policy band at the coming meeting in April 2016" - Barclays