Singapore’s slumping property market is slowing infllation (SICPIYOY) and weakening the city-state’s dollar, making it attractive for funding Southeast Asian carry trades.
Traders who sold Singapore’s currency against a basket of Indonesia’s rupiah, Malaysia’s ringgit, Thailand’s baht and the Philippine peso earned 2.2 percent since June 30, data compiled by Bloomberg show. That compares with a loss of 1.7 percent selling the U.S. dollar and a gain of 1.4 percent using Taiwan’s currency. In carry trades, investors borrow in a country with low interest rates and park funds in higher-yielding markets. The risk is that exchange-rate swings erase those gains.