Singapore forecasts deflation, contraction in 2020

This photograph taken on February 18, 2020 shows people buying vegetables at a market in Singapore. Singapore’s central bank eased monetary policy on March
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Updated 31 March 2020

Singapore forecasts deflation, contraction in 2020

  • Central bank eases monetary policy as virus heralds deep recession

SINGAPORE: Singapore’s central bank aggressively eased monetary policy on Monday as the bellwether economy braced for deflation and a deep recession this year due to the coronavirus pandemic.

The Southeast Asian nation is among the world’s most open economies and seen as a gauge of the health of the global trade. Last week, it posted a sharp decline in first quarter gross domestic product and slashed growth projections.
The Monetary Authority of Singapore (MAS) manages policy through exchange rate settings, rather than interest rates, letting the local dollar rise or fall against currencies of its main trading partners within an undisclosed band.
The widely-expected easing on Monday was the most aggressive since the 2009 financial crisis, flattening the band’s rate of increase and effectively shifting its center lower. It also comes only days after the government unveiled a large fiscal package to soften the outbreak’s hit to the economy.
While the MAS move follows drastic steps by other central banks, it was still not as bold as some in the market had expected, which pushed the local currency up slightly.
“We have heard the government talk about the downturn in pretty dire terms, so there was no mistaking that pretty aggressive easing would be required,” Barclays’ economist Brian Tan said, adding he had been expecting a bigger move.
The MAS adjusts its policy via three levers: the slope, mid-point and width of its Singapore policy band, known as the Nominal Effective Exchange Rate, or S$NEER.
The central bank on Monday said it would adopt a zero percent annual appreciation rate for its policy band, starting at the S$NEER’s prevailing level, which is currently just below the band’s mid-point.
Analysts said this amounted to a downwards adjustment of the first two settings, the slope and mid-point, but left the width unchanged.
All nine economists in a Reuters survey this month expected the central bank to ease as policymakers worldwide step up efforts to limit the economic damage from the fast spreading virus.
Most global central banks, including the US Federal Reserve, have cut interest rates to cushion the hit to businesses from the outbreak, while many have also resorted to printing money to prevent their economies from slipping into recession.

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The Monetary Authority of Singapore manages policy through exchange rate settings, rather than interest rates, letting the local dollar rise or fall against currencies of its main trading partners within an undisclosed band.

The Southeast Asian shipping, travel and finance hub is bracing for the worst recession in its 55-year history and last week lowered its 2020 GDP forecast range to -4 percent to -1 percent after a sharp contraction in the first quarter.
While Singapore’s early successful efforts to contain the coronavirus won it praise globally, a recent jump in infections to over 800 has raised some concerns about the local spread.
The central bank on Monday also lowered its official outlook for headline and core inflation to -1% to zero percent for 2020.
The MAS said its new policy settings provided “stability” to the exchange rate but added fiscal policy will be the main tool to mitigate the economic impact of the pandemic.
The city-state has spent billions in virus-related relief for businesses and households already this year, equivalent to almost 11 percent of its GDP.
Capital Economics said the move highlighted the limits of central bank policy in weathering the downturn and that further loosening of monetary settings was unlikely in the months ahead.
But others said the central bank still had room to ease when it next meets in October, if not before.
“The overall focus has been to emphasize a message of stability in the Singapore dollar,” said Moh Siong Sim, currency analyst at the Bank of Singapore.
“In the past, wherever there’s such a move, it’s taken as a prelude to a series of easings, but I think this time around the focus is more on the fiscal policy to cushion the blow and the exchange rate is more to release the pressure somewhat.”
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Former Wirecard COO Marsalek’s entry into Philippines forged, justice minister says

Updated 04 July 2020

Former Wirecard COO Marsalek’s entry into Philippines forged, justice minister says

  • Immigration officers who inputted the fictitious entries have been relieved of their duties and face administrative sanctions

MANILA: Immigration records showing Wirecard’s former chief operating officer Jan Marsalek arrived in the Philippines on June 23 and departed for China the next day were falsified, Philippines Justice Secretary Menardo Guevarra said on Saturday.
Guevarra said the immigration officers who inputted the fictitious entries have been relieved of their duties and face administrative sanctions.
“The investigation has now turned to persons who made the false entries in the database, their motives and their cohorts,” Guevarra told reporters.
Marsalek, 40, was fired as COO of the German firm on June 18 after auditor EY refused to sign off on Wirecard’s accounts. The company, once one of the hottest fintech companies in Europe, collapsed a week later owing creditors almost $4 billion after disclosing a $2.1 billion hole in its accounts that auditor EY said was the result of a sophisticated global fraud.
The missing money was purportedly held in escrow accounts at two Philippine banks, which have denied any links with the Wirecard.
Guevarra said it was possible Marsalek could be in the country, telling Reuters, “Notwithstanding the Bureau of Immigration report, I do not totally discount the possibility that Marsalek may be in the Philippines.”
“We are an island country, and there are backdoors through which undocumented foreigners may slip through,” he said.
Munich prosecutors obtained arrest warrants against ex-CEO Markus Braun and Marsalek on June 22. Braun turned himself in that day, but Marsalek has disappeared and his mobile number is no longer in service.
Both are suspected of market manipulation, false accounting and fraud, while the circle of suspects has widened to the entire management board of Wirecard.
Marsalek’s lawyer has declined all requests for comment.
Marsalek had oversight of Wirecard’s Asian operations, which are at the center of suspicion by auditors and prosecutors of attempts to falsely inflate cash balances, turnover and profit.
Guevarra said earlier immigration records had shown that Marsalek had been in the Philippines from March 3 to 5.