Probably the one FX rate that matters most to a lot of readers here, most of us being SGD based.- Quarterly : Very big picture probably still down. But a large rally very possible without making a dent on the long term downtrend.
- Monthly : Same as above. We could go as high as 1.5200 and still be in a downtrend.
- Weekly : This is worrying. DownTL broken at 1.3976 in Jan10. Rally since then taken us above 1.4120 which marks the neckline of a SHS bottom. Price action also beginning to look like my favorite periscope pattern ie bullish.
- SGD deposits have earned near zero returns for the longest time already. Deploying idle SGD funds into foreign currency deposits like AUD and GBP for interest carry over SGD and currency appreciation (although the latter not always successful) has been a no brainer in the recent past. Not any more.
- USD and GBP rates at zero. Carry on EUR, AUD much reduced. Only USD(+JPY?) has positive technical outlook; the others look weak.
- What to do? Switch from zero interest SGD into zero interest USD or JPY? Do nothing?
09 February 2010
USD/SGD : Dilemma
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3 comments:
I guess it depends on your current exposure.
If your total NW currency exposure is:
SGD - 50%
Foreign currencies - 50%,
where the foreign currencies are roughly in the ratio,
USD:JPY:EUR
57:27:16 (sum to 100);
you probably have a near 'synthetic equilibrium' across your currency exposures, and so may choose to Do Nothing; being effectively FX-hedged.
(Not truly hedged of course, because we have to take into account expenses --current and expected--, but just to keep it simple)
[above FX weights reverse-engineered from SGD basket; old outdated numbers, TS you prob have fresher numbers)
And from previously when we talked of this (currency exposures in trading and passive portfolios), I guess we can manage our exposures so that all round we are more or less hedged.
But above all not important, what I really want to say is:
one way to reduce SGD exposure, is to take it and spend it. Like go for an overseas holiday!
[apologies: guess I'm just in a holiday mood]
People are "greedy". Equilibrium not good enough. Always want to squeeze the most out of market potential ie put all eggs in the best basket.
Good holiday + Happy New Year Don.
An early happy CNY to you too, TS.
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