The Monetary Authority of Singapore slightly increased the slope of the Singapore dollar nominal effective exchange rate policy band last week, leaving its width and center unchanged. The decision was made amid expectations of continued (albeit slower) economic growth, a gradual rise in core inflation, and a pick-up in imported inflation due to higher oil and food prices.
Singapore’s economic growth eased in the third quarter of 2018 to 2.6% year-on-year (y-o-y) from the 4.1% y-o-y growth recorded in the second quarter. Manufacturing growth moderated to 4.5% y-o-y from 10.6% y-o-y during the review period and construction output contracted 3.1% y-o-y, following a 4.2% y-o-y contraction in the previous quarter, due to weakness in public sector construction.
Malaysia’s Index of Industrial Production growth slowed in August to 2.2% y-o-y from 2.6% y-o-y in July due to slower output growth in the manufacturing and electricity sector, while output growth in the mining sector remained negative.
The People’s Republic of China’s exports expanded 14.5% y-o-y in September, accelerating from 9.1% y-o-y growth in August, while import growth eased to 14.3% y-o-y from 19.9% y-o-y. The trade surplus widened to USD32 billion in September from USD27 billion in the previous month. Philippine exports expanded 3.1% y-o-y in August, up from 0.3% y-o-y, while import growth eased to 11.0% y-o-y from 31.6% y-o-y in July. The trade deficit narrowed to USD3,514 million from USD3,546 million during the review period.
Japan’s current account surplus narrowed to JPY184 billion in August from JPY201 billion in July, primarily driven by a larger deficit in the goods account surplus of JPY219 billion in August versus JPY1 billion in July as exports declined while imports rose on a month-on-month basis. The Republic of Korea’s current account surplus narrowed to USD844 million in August from USD876 million in July as the goods account surplus declined to USD1,124 million from USD1,143 million in the previous month.
The official foreign reserves of Singapore reached USD291 billion in September from USD289 billion in August due to growth in gold and foreign exchange reserves, offsetting decreases in special drawing rights and the reserve position with the International Monetary Fund.
The Philippines’ reissued 5-year Treasury bonds with a coupon rate of 5.5% were partially awarded during its auction last week. Of the PHP15.7 billion demand, only PHP9.7 billion was accepted, with the average yield soaring to 7.342%.
Last week, local currency government bond yields fell for most tenors in the People’s Republic of China; Hong Kong, China; the Republic of Korea; and Malaysia; rose for most tenors in Indonesia, the Philippines and Thailand, and rose for all tenors in Viet Nam; while yield movements were mixed in Singapore. Meanwhile, the spread between 2-year and 10-year government bonds narrowed for most markets, but widened for Hong Kong, China; Indonesia; and Malaysia.