Australian government's new $66 billion package will take coronavirus economic life support to $189 billion
SGD likely to remain susceptible to a broader market tone, says Scotiabank
The Singaporean dollar is expected to remain susceptible to a broader market tone, according to the latest research report from Scotiabank.
The city-state’s MAS core inflation eased to 0.3 percent y/y in January from 0.7 percent y/y a month ago, lower than the median estimate of 0.9 percent y/y in a Bloomberg survey.
It was largely due to lower services inflation and a steeper drop in the cost of retail & other goods and also reflected the impact of the rebasing of the CPI to 2019 as the base year, according to a statement jointly released by the MAS and the MTI on February 24.
It has further raised market expectations for the MAS to ease its S$NEER policy in April. The monetary authority is likely to reduce the slope of its policy band to zero at the April policy meeting to spur economic growth.
Earlier on February 5, the MAS said its monetary policy stance remains unchanged but declared there is enough room in the policy band to accommodate an easing of the S$NEER, in response to media queries on its policy stance.
According to Scotiabank’s estimate, the S$NEER is now running at around 0.3 percent below the centerline of the policy band with a width of +/-2 percent.
"Our analysis also suggests USD/SGD would hit the 1.42 level should the S$NEER touch the lower bound of the policy band as of writing, ceteris paribus. The S$NEER is expected to decline further in the lower half of the policy band in the run-up to the April policy review," the report further commented.
While the latest data indicate Singapore’s health authorities may have contained the coronavirus spread in the city-state, US, Japan and Italy have issued warnings on the impact of the outbreak around the world.