June 25, 2009

CIMB: Sell Singapore dollar

INVESTORS should sell the Singapore dollar because the central bank will likely seek a weaker currency to help the economy recover from a recession in the second half, according to CIMB Investment Bank Bhd.

The Singapore dollar may drop 1.7 per cent to S$1.48 versus the US currency in a month, Kuala Lumpur-based strategist Suresh Kumar Ramanathan said in a phone interview. The currency has gained 3 per cent to S$1.4543 since April 14, when the Monetary Authority of Singapore said there was “no reason for any undue weakening” of the local dollar.

“Singapore’s economy is very exposed to the global trend and having an overly strong currency may derail the recovery process,” said Suresh, whose employer is a unit of Malaysia’s second-largest banking group.

“The Singapore dollar is trading above the strong side of its policy band and we think that tolerance is coming to an end.”The MAS will bring the local currency back inside its undisclosed policy band after reports this month showed electronic exports tumbled in May for the 28th month in a row and retail sales fell in April by the most since 1999. The band’s weak side is around the S$1.57 to S$1.58 level and the stronger one at S$1.47 to S$1.48, CIMB estimated.

Singapore’s dollar and other Asian currencies may also weaken in coming weeks as concern financial markets will slump prompts investors to favor the perceived safety of US dollars.“Equity and commodity markets are looking overstretched and at risk of a significant pullback,” Suresh said. “We expect a strong US dollar to play out going into the second half.”

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About Me

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Ibrahim bin Ramli@Nuang started his career with CIMB Wealth Advisors Berhad as Agency Manager in April, 2008.Previously he was an Internal Auditors and Accounts Executive with Perodua Sales Sdn Bhd since 17 August, 1994. His background:- 1.Certified of Achievement for Master Sales Leadership from Dr Lawrence Walter Ng of President of The Art Of Learning and International Of Learning Without Learning 2.Certified for eXtra Ordinary Performance of Lawrence Walter Award Certificate for One Million Ringgit Club 2007 3. Certified Life & General insurances 4. Conferred with Diploma in Business Studiess & Bachelor of Business Admin(Hons)Finance from UiTM, Terengganu Branch & Shah Alam respectively;

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