Everyone expects a US$100 oil shock to hurt Asian currencies across the board, but the Singdollar just hit a ten month high against the ringgit while our neighbours took the hit instead. I dig into why Singapore’s balance of payments, FDI inflows and MAS’s own tightening in July are pulling in safe haven money rather than losing it. It’s not all good news though, if you’re holding an exporter earning revenue overseas, that same strength eats into what that money is worth once it comes home. I also flag what I’m personally watching next, the ringgit’s trajectory and Vietnam’s upcoming FTSE Russell reclassification.
Key takeaways:
Singdollar hit a 10-month high against the ringgit as Brent crude traded near US$103 to US$105 a barrel
MAS tightens by letting SGD trade stronger in its policy band, it does not hike rates like the Fed
Malaysia is cushioned as an oil exporter, while Philippines, Thailand and Indonesia absorb the import bill pain
A stronger Singdollar helps REITs with foreign currency debt but hurts exporters earning overseas revenue
Vietnam’s dong is holding up on FTSE Russell emerging market reclassification flows, separate from the oil story
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