More licensed security agencies receive top grading in annual audit

More licensed security agencies receive top grading in annual audit

By S Ramesh,

SINGAPORE: The quality of local security firms have improved, according to an annual assessment by the Singapore Police Force.

Law and Second Home Affairs Minister K Shanmugam said on Tuesday the number of agencies receiving the A Grade went up by eight, to 27.

Also, 59 per cent of those taking part in the grading exercise were graded B, compared to 52 per cent last year.

Opening the World Security Summit together with Malaysian Home Affairs Minister Syed Hamid Albar, both Ministers warned that the threat of global terrorism remains unabated, even as concerns rise about the world economy.

They said the private security industry is another important defence against it.

There are also plans to introduce common standards in the security business, under the umbrella of the ASEAN Security Community.

Said Mr Shanmugam: “Ultimately our efforts must translate to a safer and more secure environment at the home front. Within our respective geographies, we are confronted with challenges which increasingly place a premium on strong local partnerships”

The forum is an opportunity for security professionals to discuss issues such as emerging security threats, the use of technology and sharing expertise in conducting risk assessments.

The annual grading exercise audits all licensed security agencies and the results give customers a clearer picture of who they should use.

There are now some 27,000 security officers in the industry, up from 18,000 in 2005.

- CNA/yb

Source : Channel NewsAsia - 07 Oct 2008

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MP Teo says systems are in place to cope with economic downturn

MP Teo says systems are in place to cope with economic downturn

By Ryan Huang,

SINGAPORE: Singapore shares hit a three-year low on Monday, closing 5.6 per cent lower. This reflected the negative sentiments in other Asian markets.

The weakness also comes amid warnings of an economic slowdown for the republic, with unemployment expected to rise.

Singaporeans have been warned to brace themselves as the global economic crisis unfolds. Some have already felt the impact and are coming to terms with it.

However, amid the negative news, officials said systems are in place to deal with the situation.

“Day by day, expenses are going up, it’s not cheap. More foreigners are getting job opportunities in Singapore. Locals are afraid what the future will be and what the government will do for us,” said one woman.

A middle-aged man said: “It is a tough time for us, but we have strong leaders, so we can tide over this period.”

Government measures include a slew of programmes, fine-tuned over the years through the experience of past downturns. Many Community Development Councils (CDCs) said they already have schemes to help and are ready to respond.

Mayor, Northwest District, Dr Teo Ho Pin, said: “Since Chinese New Year, we’ve experienced an increase in the number of job seekers looking for job assistance. We don’t know what will be the scale downstream, but we are prepared with our staff and resources.”

Northwest CDC said it has seen a 10 per cent increase in the number of people seeking job assistance, and a 30 to 40 per cent increase in those seeking financial help.

The hardest hit are expected to be workers in the manufacturing and electronics sectors.

However, the Workforce Development Agency said a pipeline of investments will continue to create jobs for Singaporeans. These include Seagate ramping up its hard disk media plant, major investments by big oil companies, and promising prospects for the Seletar Aerospace Park.

The tourism sector is also expected to get a boost with the two integrated resorts requiring 20,000 workers and generating other spin-offs.

Another 1,000 healthcare jobs will be created when the new Khoo Teck Puat Hospital is partially ready by early 2010. - CNA/vm

Source : Channel NewsAsia - 07 Oct 2008

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Deflation may be next big threat

Deflation may be next big threat

Risk of sustained period of falling prices is growing

LONDON: As Federal Reserve chairman Ben Bernanke and his global colleagues fight the worst financial crisis since the 1930s, one danger is looming larger by the day: deflation.

With asset markets tumbling, commodity prices plunging the most in 50 years and banks keeping a tighter grip on credit, the risk of a sustained period of falling prices is growing, especially if the patchwork of rescue and stimulus packages fails.

‘The ghost of deflation could be dragged out of the closet again in the coming months,’ Mr Joerg Kraemer, the chief economist at Commerzbank in London, said.

A global recession is already looking more likely, with the credit freeze stirring memories of Japan’s decade-long struggle with deflation in the 1990s.

So, European Central Bank (ECB) president Jean-Claude Trichet and Bank of England governor Mervyn King may be forced to follow Mr Bernanke, whose Fed has chopped its benchmark rate by 3.25 percentage points since August last year to 2 per cent, its most aggressive round of easing in two decades.

The deflation scenario may go like this: Banks worldwide, stung by US$588 billion (S$852.4 billion) in write-downs related to toxic assets, especially mortgage-

related securities, will further cut credit flow, strangling growth. That will push house prices lower, forcing additional losses and making banks even more reluctant to lend. As the credit crisis worsens, businesses will find it almost impossible to raise prices.

Mr Tony Tan, the deputy chairman of the Government of Singapore Investment Corporation, said: ‘A vicious deflationary cycle’ could then ensue.

Prices are already falling in parts of the world economy. Home values have dropped more than 10 per cent in the United Kingdom and the United States in the past year. Oil, copper and corn drove commodities towards their biggest weekly decline since at least 1956 on Oct 3. The Baltic Dry Index, a measure of commodity shipping costs, has dropped 75 per cent since May.

Mr Trichet said last week that European policymakers had considered reversing their July decision to raise the benchmark rate by a quarter point to 4.25 per cent. Most economists expected the Bank of England to cut its key rate by at least a quarter point on Thursday from 5 per cent.

The Fed has already responded to one deflationary scare this decade. With inflation approaching 1 per cent in 2003, then-chairman Alan Greenspan slashed the Fed’s rate to a 45-year low of 1 per cent and kept it there for a year, which critics said helped fuel the property and credit boom now unravelling.

This time, the crisis is an increasingly dysfunctional banking system that may be unable to continue making loans that grease economic activity. Such a pullback, combined with slowing growth and falling asset and commodity prices, makes deflation more of a threat, Mr David Owen, the chief European economist at Dresdner Kleinwort Group in London, said.

Spooked by the collapse of Lehman Brothers and other institutions, banks are restricting access to credit. The London interbank offered rate they charge each other for three-month loans in dollars rose to 4.33 per cent on Oct 3, the highest since January.

Not all economists share Mr Owen’s gloomy outlook. Some say Mr Bernanke and other central bankers have learned the lessons of Japan and the Great Depression so well they will do everything necessary to head off trouble.

When credit markets started seizing up in August last year, Mr Bernanke set up US$1.4 trillion in emergency borrowing for financial institutions. The ECB, Bank of Japan and other central banks have set up similar lifelines. Last Friday, US President George W. Bush signed into law a US$700 billion bank rescue plan.

Mr Kraemer said the Fed might also consider further easing collateral requirements or purchases of government bonds ‘as a last resort’.

BLOOMBERG NEWS

Source : Straits Times - 07 Oct 2008

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On the hunt for illegal tenants - Singapore

On the hunt for illegal tenants - Singapore

The HDB has stepped up enforcement blitzes to stop the illegal subletting of its subsidised rental flats. Jessica Cheam joined Housing Board officers in the search for illegal tenants at a block in Circuit Road last week.

An HDB officer pasting a “Notic to Quit” letter on the door of a subsidised rental flat in a block in Circuit Road. The letter orders the tenant, believed to be illegally subletting the flat, to contact HDB and vacate the unit within a month.

ONE sign that something fishy might be going on at a rental flat is this: closed shutters and doors - especially if the lights are on.

HDB officers were on the lookout for such flats at a 16-storey rental block with two- and three-room units in Circuit Road as part of their stepped-up checks last Tuesday.

Such checks are in addition to HDB’s regular visits to all rental flats to ensure tenants are not illegally subletting the flats for profit.

Those with nothing to hide usually leave windows and doors open for ventilation as rental flats typically do not have air-conditioning.

When The Straits Times joined them on their inspection last week, the officers spent little time at several flats that had their doors open, taking only a few seconds to verify the status of the tenants.

Equipped with a file detailing tenants’ names and particulars, they went around in pairs, knocking on doors. They said they typically visit after working hours or during weekends, when tenants are likely to be at home.

When a tenant answered the door, they asked for names to verify identities. They also kept a lookout for any irregularities in the flat or in an occupant’s profile, such as a mismatch of his or her stated age with the records on file.

Units with doors closed were harder to inspect. In some cases, nobody was at home and in others, the occupants had apparently decided not to open the door.

After knocking on about 10 doors, the officers stopped at one flat where no one had responded. Although the windows and door were firmly shut, the lights were on and faint noises could be heard - betraying the presence of its occupants.

The officers rapped loudly on the window’s metal shutters. One officer, Mr Tan (not his real name), called out: ‘Is anybody home?’

No answer.

‘It’s the HDB,’ he called out again, this time identifying himself.

Still no answer.

Mr Tan and his colleague were about to move on when a girl aged about 15 opened the door. She said she was staying at the flat for a week with her parent’s female friend, who was not in at the moment.

According to Mr Tan’s records, the tenant was a 70-year-old man.

The officers exchanged knowing looks. Mr Tan politely but firmly asked her to unlock the gate, assuring her it was a ‘regular HDB inspection’.

She looked scared but let them in. They took photographs of the interior, part of their procedure to gather evidence, and noted that it appeared to be occupied only by her.

There was just one bed in the two-room flat. Books and girls’ clothing were strewn all over the flat; a laptop and a television sat in the corner. On a table were some Thai baht notes.

Mr Tan explained that he needed a statement from her. Looking worried, she finally confessed.

She said she was a student from Thailand who went to a secondary school nearby. Her ‘parent’s friend’ did not live with her and visited only occasionally to collect the mail. Obviously not aware of the rental rules, she revealed - to raised eyebrows - that she paid $1,000 a month to live there.

This meant that her landlord - the legal tenant who pays a base rent of $44 - had been making a tidy profit of up to $956 a month.

Mr Tan asked the girl if they could have the contact number of her ‘parent’s friend’ but she refused to give it to them.

The team thanked her for cooperating and left.

The next day, HDB pasted a ‘Notice to Quit’ on the door - giving the tenant notice to contact the Housing Board and vacate the flat within a month.

What if the girl had not answered the door?

Mr Tan said ‘it’s three strikes and it’s out’ - at the third visit, if no one answers the door, a similar ‘Notice to Quit’ is pasted on the door.

‘This usually gets the tenant ringing us in a hurry,’ he said.

He added that neighbours have helped HDB with its checks by ringing its hotline to give feedback.

The HDB is not ruling out imposing a heftier penalty - in the form of fines - on tenants who illegally sublet their flats.

Currently, tenants illegally renting out their home can lose the flat and face a five-year ban from renting or buying HDB property.

Source : Straits Times - 07 Oct 2008

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Dorm access road to cost $2m

Dorm access road to cost $2m

But Tai Hwan Gardens residents say plan pushes problem to them

By Lim Wei Chean

IT IS a $2 million compromise that the Government has worked out to appease Serangoon Gardens residents unhappy over the foreign worker dormitory to come up in their neighbourhood.
This is what it would cost to build the 400m access road to the dorm, which will occupy the old Serangoon Gardens Technical School premises.

A National Development Ministry spokesman, responding to Straits Times queries, cited $2 million as the ‘ballpark cost’ for the new access road of the temporary dorm, subject to adjustments based on the detailed design.

With the new two-way road to the dorm from Ang Mo Kio Avenue 1, vehicles ferrying the workers to and from their lodgings will not need to use Serangoon Gardens’ Burghley Drive.

This was one big bugbear for residents of Burghley, as the proposed dorm - just 10m from their front doors - presented the prospect of foreign workers being emptied out into the small street.

Now, the Burghley Drive entrance will be sealed up, and the dorm will be set further in.

But another lot of residents are fuming - those living in Tai Hwan Gardens, who see the move as merely having shifted the problem into their backyard.

Business owner Mabel Koh, 46, who lives in Tai Hwan Heights, said: ‘Now they are pushing the whole thing to our side without solving the problem.’

Dwellers of Kingsgrove Condominium next to Ang Mo Kio Avenue 1 will face the entrance to the new access road; others living along the canal - along Tai Hwan Terrace, Tai Hwan Grove, Tai Hwan Crescent and Tai Hwan Drive - will face the road.

Banker Mark Giblett, 40, worries about the noise and pollution caused by buses fetching the workers to and from their work place in the IT and electronics factories in Ang Mo Kio. He added that, with these workers working shifts, they will be going in and out of the compound at irregular hours, potentially causing disruption at all hours.

Other residents pointed out that Ang Mo Kio Avenue 1 is already jammed during the morning peak hours, with motorists using it to avoid the Electronic Road Pricing charges on the Central Expressway (CTE). Having more vehicles will only worsen the situation, they said.

An industrial designer who gave his name only as Mr Low suggested having the dorm link to the CTE directly, instead of looping out to the main road.

Responding to this, a Land Transport Authority spokesman said the request would be looked at ‘based on careful consideration of the safety and traffic implications’.

Ms Koh noted angrily that none of the solutions tackled the basic concern - that of residents having to deal with 600 new foreign dwellers coming into their estate.

Source : Straits Times - 07 Oct 2008

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Emergency action in Europe

Emergency action in Europe

The German government has had to arrange a bailout for its fourth-biggest bank, Hypo Real Estate. — PHOTO: REUTERS

GERMANY

The government is working on a new plan to protect the entire German bank sector, after abandoning plans to handle problems on a case-by-case basis.

The government, private banks and insurers agree on a ¥50 billion (S$100 billion) rescue package for Hypo Real Estate, the country’s fourth biggest bank, after an earlier deal falls apart.

On Sunday, Germany announced a surprise blanket guarantee of all private bank deposits in an effort to calm fears.

BRITAIN

The government convenes a new ‘economic war cabinet’ to grapple with how to protect British banks, after Germany’s surprise move to guarantee bank deposits puts pressure on Britain to do the same.

British papers say the government is considering buying shares in the country’s banks so as to boost their capital - in effect, a partial nationalisation of the sector.

ICELAND

Halts trading in the shares of all its major banks and financial firms and its weakened currency, the krona, tumbles 20 per cent against the euro.

The government is drawing up a financial crisis plan while banks agree to sell off overseas assets.

Iceland is particularly vulnerable as its banking sector dwarfs the rest of the economy, weighing eight times its gross domestic product.

FRANCE/BELGIUM/LUXEMBOURG

French President Nicolas Sarkozy holds emergency meeting with bankers and insurers.

BNP Paribas, France’s biggest bank, agrees to take control of banking and insurance giant Fortis in Belgium and Luxembourg for ¥14.5 billion, after a government rescue failed.

ITALY

UniCredit, Italy’s second-biggest bank and the most exposed to the credit crisis, says it will ask shareholders for ¥3 billion and pay this year’s dividend in new shares instead of cash.

AUSTRIA

The government guarantees all bank deposits.

DENMARK

The government guarantees all bank deposits.

SWEDEN

The government doubles the limit for bank deposit insurance to 500,000 kronor (S$100,000) from 250,000 kronor. It will also guarantee deposits at foreign banks with offices in Sweden if their governments are unable to do so.

NORWAY

Temporarily loosens collateral rules, giving its banks greater access to central bank loans.

RUSSIA

Trading on Russia’s two key stock markets is suspended after share prices nosedived by 15 per cent.

EUROPEAN CENTRAL BANKS

The European Central Bank, the Bank of England and the Swiss National Bank offer over US$70 billion (S$100 billion) to cash-strapped credit markets.

Source : Straits Times - 07 Oct 2008

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US dollar and yen soar as investors seek safety

US dollar and yen soar as investors seek safety

Against the Singdollar, US dollar hits a one-year high; yen is at its highest since March

By Fiona Chan

HOLIDAYMAKERS planning a year-end trip to the United States or Japan may need to increase their budgets.
That vacation is now getting more expensive by the day, as the US dollar and Japanese yen surge sharply against the euro and other Asian currencies, including the Singapore dollar.

Yesterday, the US dollar hit a one-year high against the Singdollar, while the yen has reached its highest level against the Singdollar since March.

The two currencies have emerged as winners amid the chaos that has engulfed financial markets over the last week, as the US-originated credit crisis spreads to Europe and elsewhere.

Panicky investors are seeking safety by piling into the yen and the US dollar. Even though the US was until recently the epicentre of the crisis, it remains the main global currency and therefore a safe haven, say analysts.

Economists expect the yen and US dollar to continue strengthening in at least the short term, as investors around the world unwind and cut debt.

The good news: Holidays to Europe and Australia are likely to be cheaper now.

As the focus of the global credit crisis shifted to Europe in recent days, the once-powerful euro plunged to its lowest level against the US dollar in a year. It also fell to a 21/2-year low against the yen.

The Australian and New Zealand dollars have also dived, due to investors moving out of such high-yielding currencies into safer waters.

These currency trends are likely to continue for the rest of the year, given the strong wave of risk aversion that has swept the market, said OCBC currency strategist Emmanuel Ng.

‘Basically the primary motivation in the markets now is the scramble for US dollars,’ he said.

Investors are pulling out of emerging market assets and sending the cash back to the US amid a liquidity squeeze, pushing up the dollar.

Mr Ng estimated that the Singdollar will probably end the year at about $1.45 to $1.50 to the US dollar. It was about $1.47 last night.

Part of the reason the Singdollar has been falling relative to the US dollar is due to the general flight to safety in favour of the US dollar.

However, the Singdollar was also weighed down by expectations that the Monetary Authority of Singapore (MAS) will reverse its Singdollar policy stance in an announcement due on Friday, allowing the currency to weaken even more.

This would address growth concerns, which have taken precedence over inflationary worries.

‘There is scope for the Singdollar to weaken further,’ said Citigroup economist Kit Wei Zheng. ‘It may not spark a recovery, but it will ease the pain felt by exporters.’

Whether the Singdollar continues to weaken against the US dollar depends on how strong the US dollar rebound will be.

This in turn depends on what happens in Europe in the coming weeks - and on how much MAS eases policy, he said.

‘The European economy is in deeper trouble than the Singapore economy, so the Singdollar will have some gains against the euro,’ said Mr Kit, adding that the local currency was also set to do better than the Australian dollar for a while.

Against other Asian currencies, the trends are not so clear-cut. The Singdollar is likely to lose ground against currencies such as the Chinese yuan but gain on the Korean won, in accordance with how these economies will probably fare compared to Singapore, Mr Kit said.

Most experts agree that the best bet now appears to be the US dollar.

While it may seem counter-intuitive, given that global financial markets are reeling from a US-triggered crisis, the US dollar is still the world’s de facto reserve currency, which means it gains whenever there is worldwide upheaval - even if the trouble originates in the US.

‘It’s ironic, given that we just messed up big time, the response of foreigners is to pour more money into us,’ Harvard University economics professor Kenneth Rogoff told The New York Times. ‘They’re not sure where else to go.’

Source : Straits Times - 07 Oct 2008

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Not for sale: AIG’s Asian general insurance business

Not for sale: AIG’s Asian general insurance business

By GENEVIEVE CUA

AIG will not sell its general insurance operations in Asia, AIG officials declared yesterday. Leslie Mouat, AIG regional president for South-east Asia, yesterday told reporters that AIG would ‘absolutely’ not consider even the sale of minority stakes.

As for the Asian life business, however, AIG has said that it would retain majority ownership but would seek ‘minority strategic investors’ to take a slice of the business.

Reuters yesterday reported that the Philippine life business has received offers and there are also plans to sell the Thai consumer finance company.

Speaking to reporters yesterday, Mr Mouat said that the Asian non-life business is ‘exceptionally profitable’. ‘In every market, we exceed the regulatory margin of solvency requirement, in some cases by five to six times.

‘I’d like to say it’s business as usual, but very clearly our reputation has taken a bit of a hit in the last few weeks. We’re working exceptionally hard to rebuild that reputation.’

Last week, parent AIG Inc announced that it would refocus on the core property and casualty insurance business, and generate sufficient liquidity to pay the outstanding balance of a loan from the US Federal Reserve. AIG has drawn US$61 billion of the US$85 billion facility as at end-September.

S&P last Friday revised the outlook on AIG and its guaranteed subsidiaries to ‘negative’ from ‘developing’, citing risks to the insurer’s plan to sell assets. S&P said that the US$61 billion drawn so far was larger than expected, ‘causing the scope of the planned business sales to exceed our expectations’.

Mr Mouat said that AIG’s foreign general insurance business has collected US$8.1 billion in net premiums in the first half of the year, and generated profits of US$1.5 billion.

Kevin Goulding, president of American Home Assurance Co, said that the Singapore business ranks highest in terms of assets in the industry at US$650 million, of which US$100 million is in cash. ‘Our brand has been tarnished . . . Hopefully, we will be able to turn that around pretty rapidly.’

Premiums rose 19 per cent last month on a year-on-year basis. ‘Growth for the month has been one of the best. Retention didn’t suffer,’ he said.

Source : Business Times - 07 Oct 2008

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Dearth of IT professionals hits businesses

Dearth of IT professionals hits businesses

By ONG BOON KIAT

THE lack of skilled IT professionals has had a ‘moderate to severe’ negative impact on businesses, according to a survey by US recruitment firm Kelly Services.

Around 80 per cent of respondents from 440 Asia- Pacific organisations said their businesses were affected. And around 63 per cent of respondents from Singapore felt the same, the survey on IT skills in Asia-Pacific found.

‘The IT skills shortage is real and is fast approaching a critical state,’ said Dhirendra Shantilal, senior vice-president of Asia-Pacific, Kelly Services.

‘The IT job market has been very active in the past two to three years due to the setting up of IT hubs and regional shared services centres, which see a boost in demand for experienced IT professionals and teams to manage and support these operations.’

The Michigan-headquartered firm conducted its survey earlier this year, covering 440 Asia-Pacific organisations across 25 industries from Singapore, Australia, Hong Kong, Thailand, Vietnam and other countries. The results were released yesterday.

According to the survey, the lack of experience among the organisation’s current IT workforce was the main reason for the shortage of qualified IT talent - cited by 42 per cent of respondents. This was followed by inadequate or non-competitive salary and compensation packages, cited by 40 per cent of respondents; while 36 per cent listed weak talent retention as the causal factor.

Compared with its neighbours, Singapore employers were less severely affected but still pinched by the talent crunch. Two out of three respondents in Singapore - or 63 per cent - felt that the problem has affected their business.

Mr Shantilal noted that Singapore shares its neighbours’ sentiments in terms of key reasons for the shortage of IT talent. Lack of experience is the most frequently mentioned driver by Singapore respondents, followed by non-competitive salary and compensation packages.

‘Singapore organisations should seek to understand the problem of lack of skills in the context of their own company and conduct a skills audit to identify where the shortages lie. From there, they can offer their employees opportunities to develop new skills and competencies to fill the gaps,’ he advised.

Singapore firms can also try hiring from other companies although he noted that doing so can drive up the employer’s costs significantly and may not be effective in the longer term.

Source : Business Times - 07 Oct 2008

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US$, yen explode on risk aversion-SINGAPORE

US$, yen explode on risk aversion-SINGAPORE

Korean won, A$ worst hit; US$ climbs to year’s high of S$1.4625

By LARRY WEE

(SINGAPORE) The US dollar and Japanese yen exploded to fresh multi-year highs versus key currencies like the euro and Australian dollar yesterday, as investors rushed out of risky financial assets of all kinds.

‘Anything with the word ‘emerging’ in it is getting sold off too,’ reported Bank of America strategist Yeo Han Sia, on a day which saw key Asian stock indices in Hong Kong, Singapore, China and Thailand bloodied by painful losses of more than 5 per cent each.

Claudio Piron, head of Asian forex research at JPMorgan, explained investors everywhere were getting increasingly rattled by news that the financial and systemic risk which started in Wall Street has now translated into weaker economic data and recession fears across the globe too.

Indeed, for export-dependent Asia, the Korean won was at one point the day’s biggest victim, tumbling the best part of 5 per cent to record lows not seen in more than six years versus the US dollar, while the Indonesian rupiah and Indian rupee posted fresh 2008 lows as well. Further north, forward trading via six and 12-month non-deliverable forwards or NDFs saw the US dollar elbow its way back above seven Chinese yuan for the first time this year.

Warned Mr Yeo: ‘Unfortunately, the overshoot may persist, with a global loss of confidence in anything risky; upside targets set 6-9 months ago for weaker Asian units like the won and rupee, at levels such as 12,000 won and 47 rupees, have already been hit and even exceeded.’

Down Under, traders reported that the Australian dollar suffered outsized losses of 6 per cent against the yen on stop-loss selling out of Japan, after it fell through 80 yen for only the first time since February 2005.

Locally, meanwhile, the high-yield Australian dollar also fell below S$1.10 for the first time in more than five years - punished not only by an expected rate cut this morning but also a sharp slide in commodity prices as well. Over the past weekend, a broader CRB index of commodity prices recorded a fresh 2008 low of 326.48.

The Singapore dollar itself was dragged down to a fresh 2008 low of S$1.4625 per US dollar, hurt not only because it is often seen as a more liquid proxy for the region’s currencies, but also because of the euro’s sharp losses more recently.

Europe’s common currency fell the best part of 2 and 4 per cent versus the US dollar and yen respectively yesterday, battered by news that the leaders of Germany, France, the United Kingdom and Italy had failed to come up with a comprehensive rescue package for their banks - like the US$700 billion package finally approved by US lawmakers late last Friday.

Explained Mr Piron: ‘We estimate that the euro accounts for something like an 11 per cent weighting in the trade-weighted Singapore dollar, and can act as a pretty weighty drag on the latter.’

And with the Monetary Authority of Singapore likely to announce an easier monetary policy stance this Friday, Mr Piron would not be surprised to see the US dollar overshoot to US$1.50 before the year is out. That said, the picture can quickly change for the US dollar if we should see coordinated action on the interest rate front by G-7 leaders, who are meeting this Thursday.

He explained: ‘The VIX (a closely-watched volatility index) closed at 45.14 last Friday but, historically speaking, such levels don’t persist for long before something brings it back down.’

Looking further out, beyond the next quarter or two, the US dollar could even resume its fall, both Mr Piron and Mr Yeo suggested, after the current scramble for safer refuge destinations has done its worst.

Said Mr Yeo: ‘We can expect the financial markets to refocus on fundamentals further out, even if the timing for that is not very visible at the moment, given the current level of fear and uncertainty out there.’

Source : Business Times - 07 Oct 2008

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