By Michelle Jamrisko
Southeast Asia has done a “decent job” of allowing markets to absorb some shocks from an aggressive US monetary tightening while ensuring that currency weakness doesn’t spiral out of control, according to Singapore’s central bank chief.
“It goes back to striking the right balance between letting the exchange rate depreciate to absorb the shock; not to fight it, not to fight the market movements too much,” Monetary Authority of Singapore Managing Director Ravi Menon said in an interview with Bloomberg Television’s Haslinda Amin.
At the same time, central banks must “lean against the wind” and deploy some of their foreign currency reserves as they’ve done so the situation doesn’t get out of hand. “A whole lot of things can happen when the exchange rate moves too fast, too far” including a disanchoring of confidence, he said.
Four of the biggest economies in Southeast Asia — Indonesia, Thailand, the Philippines and Malaysia — are grappling with more than 8% depreciation in their currencies this year, prompting active intervention and key rate increases in part to curtail imported inflation. Countries have been managing the situation well and fundamentals are stronger now compared to five years ago, according to Menon, as he urged peers to remain vigilant.
“If the dollar appreciates much more rapidly than this, then yes, we do have to be concerned,” said Menon.
In the Philippines, officials have signaled they’ll act to prevent the currency from “breaching 60” pesos to the dollar, practically drawing a line in the sand. Elsewhere, including in Japan and in India, officials have been deploying billions of dollars to shield their currencies against the dollar strength with the backdrop of the Federal Reserve’s steep rate hikes.
Singapore this month tightened monetary policy for a fifth time since October 2021 to fight inflation, which it sees staying elevated through 2023. The latest print showed core prices, which is the MAS’s preferred gauge, accelerated again in September to the fastest pace in almost 14 years, as the costs of staples and recreation surge.
Still, inflation rates across Asia are mild compared with the US, where price growth has triggered “faster and harsher” tightening than in other parts of the world, said the MAS chief. Slowing growth and recession risks especially for the US, UK and Europe loom next year as the world contends with the fallout from rate hikes, he said. Yet there is a silver lining.
“Given where inflation is, a slowdown in the global economy is not altogether a bad thing,” Menon said. “It’s a good way to relieve those inflationary pressures. Provided the slowdown is mild, short, and shallow.”
The dollar remains the dominant global currency “by far” where nothing comes close so to refer to this trend where there’s greater use of local currencies on regional trade as de-dollarization “is far too strong a word”
“I don’t think we can take away the fact that 60-80% of central bank reserves are held in US dollars. The US dollar is on the other side of 90% of every foreign exchange trade in the world. It just goes to show how strong the position of the dollar is”
Menon is preparing to play host to some 60,000 people at Singapore’s FinTech Festival Nov. 2-4, which will be the event’s first in-person gathering since 2019. The festival will feature panels with public and private banking and business leaders, including Grab co-founder Anthony Tan, Central Bank of Kenya Governor Patrick Njoroge, Binance CEO Changpeng Zhao and Melinda French Gates
© 2022 Bloomberg L.P.
Demand for resale flats is expected to remain heightened in the face of BTO delays. Avoid buying a resale unit that is wrong for you by…
For the ninth consecutive year, CNH Industrial has been named a "Green Master" by the Wisconsin Sustainable Business Council (WSBC).
The company, on Oct 31, received its its final payment relating to the disposal
NORTHAMPTON, MA / ACCESSWIRE / November 1, 2022 / Enbridge: Just about every office or institutional space in North America requires power, heat and hot water. Think of an airport, or an industrial facility, a hospital or school. Think of Winnipeg …
The Monetary Authority of Singapore’s reliance on exchange rate as the monetary policy tool to fight inflation is bringing rich dividends for bond investors.
If you want to continue driving your car after 10 years, you can do so by renewing your COE. Here’s how much it costs, and how this option…
The report by Avanade and Efma also reveals that only 25% of banks globally have a climate risk model ready.
Virtual Run by Herbalife Nutrition is back for the third year running to spur actions for building healthy active living habits among Asia Pacific consumersHONG KONG SAR – Media OutReach – 1 November 2022 – Premier global nutrition company, Herbalife Nutrition released the findings from its Asia Pacific Personal Habits Survey today, revealing that 8 out of ten consumers in the APAC region want to kick unhealthy lifestyle habits they developed during the pandemic. In particular, eating an unbalan
"We are going to thrive again, so we don’t have any takeover discussions."
Households could potentially face $1,000 per month higher mortgage payments on the new rates once loans are refinanced.
The integrated resort operator could see better days ahead as economies open up. The post Can Genting Singapore’s Dividends Continue to Rise? appeared first on The Smart Investor.
Asian stocks were mixed Wednesday following losses on Wall Street as forecast-beating US data jolted hopes the Federal Reserve could soon tone down its hawkish pace of interest rate hikes.
NORTHAMPTON, MA / ACCESSWIRE / November 1, 2022 / Logitech Logitech's 14th annual Impact Report shares the latest progress toward its goal of Designing a Positive Future, one that defies the logic of the past to create a more equitable and climate …
World Federation of Youth Clubs (WFYC) recently announced the 2022 Promise Awards recipients during its second annual celebration.
NORTHAMPTON, MA / ACCESSWIRE / October 31, 2022 / Calavo Growers: ENVIRONMENT In Mexico, we donated containers for the correct separation of waste in the community of Arantepacua.Provided funding for specialized equipment to help a Civil Protection …
Emby is currently serving his notice period till April 28. See the reason behind his resignation here.
Gold prices rose on Wednesday as the dollar weakened, but they held to a tight range with investors reluctant to place big bets before the U.S. Federal Reserve's rate decision later in the day. Spot gold rose 0.4% to $1,653.76 per ounce by 0917 GMT, while U.S. gold futures gained 0.5% to $1,657.00. The Fed is due to release its policy statement at 2 p.m. EDT (1800 GMT) and is widely expected to raise its benchmark overnight interest rate by 75 basis points, the fourth such increase in a row.
Advances in genomic studies have now permeated all aspects of our lives from agriculture to health and wellness. It is therefore becoming increasingly important to help the community understand these innovations so that they can navigate the increasingly complex realm of genomics. To this end, the outreach team at the Carl R.
India's fast-depleting foreign exchange reserves are likely to drop more than was predicted just a month ago by end-2022 as the Reserve Bank of India will continue to shield the rupee from the dollar's strength, a Reuters poll found. Even though the RBI has drawn down about $118 billion from its currency reserves from a peak of $642 billion over a year ago, the rupee has fallen nearly 12% during the same period. India's forex reserves were forecast to fall to $510 billion from around $525 billion by the end of this year, the Oct. 28-Nov. 1 Reuters poll of 19 economists showed.
The Reserve Bank of India (RBI) will launch the pilot for a central-bank-backed digital rupee for the wholesale segment on Nov. 1, it said on Monday, identifying nine banks, including top lender State Bank of India, to participate in the project. Settlements in central bank digital currency would reduce transaction costs, the RBI added. Besides SBI, the pilot will include Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC, the RBI said.
