Weak February NODX figures raise odds of MAS easing: Citi

THE plunge in February trade numbers has lifted the odds of further easing by the Monetary Authority of Singapore (MAS) in April, Citi Research said on Tuesday.

Singapore's non-oil domestic exports (NODX) fell by a sharp 9.7 per cent year on year last month, following three straight months of increases.

"Risks of a MAS move in April have risen on downside growth risk," said Citi economist Kit Wei Zheng in a report, noting that the February industrial production data - to be out on March 26 - will lead the bank's research team to finalise its GDP (gross domestic product) forecast and policy call.

For now, he noted that the NODX weakness ties in with a 4.7 per cent month-on-month seasonally adjusted drop in industrial production numbers in January.

"And (it is) also consistent with weak February numbers out of Korea and Taiwan that go beyond moving holiday effects," said Mr Kit.

There is now a rising risk that Singapore's Ministry of Trade and Industry may downgrade the official GDP forecast to 1-3 per cent in May.

"Even though Q1 growth weakness may have, to some extent, been pre-empted by the Jan 28 slope reduction, risks of a further April policy move may have risen," Mr Kit said. "In addition, whether or not MAS eases, band widening remains a distinct possibility to accommodate USD strength ahead of Fed hikes."

In January, MAS cut the slope of its Singapore dollar nominal effective exchange rate (S$NEER) - a move that eases the appreciation of the Singapore dollar (SGD). The S$NEER refers to the rate at which the SGD is valued against an undisclosed basket of currencies. The more trade that Singapore does with a country, the greater the weight of that country's currency in the basket.