SGD speculation on falling export volumes, likely weaker PMI

We see Singapore's Purchasing Managers' Index (PMI) declined for the fourth consecutive month in March. As per pre-determined estimates of industrial activity of March, PMI halted in negative area at 49.6 due to the weaker outlook for new export orders. Industrial production is expected to get better further in 2nd term of 2015 on better external developmental impetus from the US and Euro zone.

It is projected that IP numbers to have fallen 6.1% yoy from a 1.1% contraction in January-February. The high base effect in March influences our forecast. Meanwhile, the resilient trajectories of construction and services growth cushioned poor manufacturing momentum.

Earlier this month the Singapore dollar boomed to 1.3597 levels per US dollar after the central bank's unexpected move spurred investors to slash bearish bets on the currency. Prior to that, the Singapore dollar weakened to 1.3746. Keeping news driven market fluctuations in mind we could sense some bearish trend and suspect SGD to depreciate against USD in the near term propped up by some unwinding of the long USD positions but should return to strength eventually later as major hard currencies such as Euro in negative news and dollar's domestic uncertainties.

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