DOLLAR-SING: DOLLAR-SING: The MAS decided to.........>

DOLLAR-SING: DOLLAR-SING: The MAS decided to tighten MonPol today, which will

see the slope of the SGD's policy band steepen slightly from zero percent

previously in place. The width & mid-point of the band remain unchanged. -

Separately, Singapore's real GDP growth came in at 4.3% Y/Y in Q1 vs. 3.6% Y/Y

in Q4, suggesting that the economy is robust enough to withstand the effects of

a stronger SGD. - The tightening was widely exp. & USDSGD did not move much

following the decision. Changes in the MAS' currency policy tend to have little

impact on the short-term direction of USDSGD as the currency is managed against

an undisclosed basket of trading partners' currencies. - In the longer-term the

appreciatory bias should lead to a resumption in the long-term downtrend of

USDSGD & a recovery in the SGD relative to its Asian peers. As we argued in a

previous article "Singapore Dollar Set To Outperform Chinese Yuan" (For Full

Story See Main Wire At 08:01 GMT 04/11), we see the potential for SGD to

outperform CNH as the former has become very cheap relative to the latter &

interest rate differentials are moving in the SGD's favour.