April 23rd, 2008

KRW tried to break 1000 but collapsed on exporter and long liquidation; 990-1000 should trade on fears of worse c/a deficit
Bank Negara estimated to have bought 1 yard USDMYR as market preferring MYR and SGD; CPI was lower at 2.8% so could provide rest
Singapore inflation at 6.7% in March, mktexp 6.8%, Bob sold another $250 usd; may break through 2% in SGD NEER

South Africa
- have raised 450bp in current cycle vs. 400bp in previous cycle; comments made Governor say policy is less accomodative vs. tightening
- next meeting is 12June
- low per capita income means inflation baskets heavily weighted to food and fuel
- affects countries where main products arent subsidized even more (so South Africa's inflation worse than India)
- in 2003, South Africa well adjusted politically so jumped on consumption bandwagon and increased c/a deficit, while Brazil was uncertain under Lula so grew domestic demand and favored commodity exports
- because of deficit, world marked as bad risk which hit currency which increased inflation
- massive inflows => easy political maneuvers to help the poor; artificially low interest rates; boosting growth; stronger ccy
- SWF could've solved this but Brazil, India, and South Africa too growth occupied

Asian markets were fairly positive as MYR and SGD continued to be the two currencies of choice with the Malaysian CB needing to intervene on the bid for nearly $1bn of USDMYR. Inflation concerns continue to dominate most nations as slightly positive SGD and MYR CPI figures could help halt currency appreciation. Thailand and Vietnam potentially will further alter rice dynamics with proposals to halt exports to maintain domestic supply to counter energy inflation. South African CPI came in higher than expected increasing chances for another rate hike in June meeting but currencies were fairly muted in reacting. EURUSD and USDJPY as well were fairly rangebound with a slightly USD positive note as equities were in the black and yields were higher.