Singapore likely to mull over an easing in FX policy

Analyst predicts 25% probability.

According to Nomura, the probability of an easing in FX policy at the April meeting (around 25%) is likely to carry the next highest probability and would be supported by weak growth momentum (recent IP and NODX data) and the forecast of softer headline inflation.

However, this scenario looks more likely at the October MAS meeting than in April, as authorities will likely be watching for evidence that headline inflation will trend sharply lower, which should also be supported by Nomura Economics‟ forecast for weak H2 2013 growth in Europe and a cyclical downturn in China.

"The scenario of a tightening in FX policy at the April meeting is extremely low (5%) in our view. We do not believe the authorities see upside risks to overall inflation and will turn much more optimistic on the global growth backdrop," Nomura said.