Mingze Wu | Jun 26, 2013 05:16AM ET
SGD received a slight boost today – Industrial Production for May grew 2.1% Y/Y and 1.2% M/M, vs a poll conducted by Reuters in which analysts shared a consensus 0.3% and -0.5% growth estimate respectively. The surprise gain was attributed to the increase in Pharmaceuticals products which grew 25.2% Y/Y. Growth in Electronics was more modest but nonetheless healthy, coming in at +4.3%. Not all is rosy though, with Off-shore and Marine engineering, 3rd largest industrial sector in Singapore shrinking 11.9%. Nonetheless, it should be said that Industrial Production for May is strong, with 3 months moving average figure (ex Biomedical) finally turning positive. Despite this strong print, SGD did not rally significantly, but meekly nudged USD/SGD lower with current price still slightly higher above 1.271 support that has been in play post Bernanke’s announcement.
This lack luster reaction is not unexpected, as SGD was not expected to move strongly even when the economic situation improves/worsens unless the difference is indeed extreme. This is due to stability of Central Bank of Singapore, who is unlikely to make changes to current monetary policies. As a result of which, only a strong enough shift in leading indicator data that can potentially derail current economic growth/inflation rate trajectory within MAS comfort zone can result in larger reaction in SGD.
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