ANZ say the SGD strength is not warranted, recommend selling the crosses　

In brief:

  • SGD strength this year has mainly been on the back of dollar weakness, rather than based on domestic merits.
  • The S$NEER is trading back above the midpoint of the band. Adjusted for inflation, the real effective exchange rate is elevated given the stage of Singapore's economic cycle, and needs to be weaker, in our view.
  • Though we do not expect MAS to change their policy stance at the upcoming April review, further easing beyond that cannot be ruled out. The market seems to be under-pricing this.
  • We recommend selling SGD against CNH, MYR and IDR.