Just saw a report from DBS.
Looks like we are expecting the USD to SGD to weaken over the next year.
Here is how it is expected to happen :
- US will be deleveraging itself ( which is happening at the moment)
- People will sell off their assets and pay back the loans used to buy the assets
- Since the loans were in USD, the people have to buy USD
- This cause a shortage in USD in the forex market, causing the USD to appreciate/rise at the moment
- However, since Japan is also deleveraging itself, but at a slower rate, people will sell off their USD for Yen as the 'Yen carry trade**' was widely used in the past.
- This in turn will provide the supply of USD in the currency market and cause the USD to depreciate/drop
- On the other hand, as of Oct 2008, Singapore has shifted to a zero appreciate of its SGD
- So with respect to USD and SGD, the USD is expected to weaken
**More info of the Yen carry trade at :http://ntuchartist.blogspot.com/2008/11/how-world-is-deleveraging-itself.html