SINGAPORE (Aug 26): US President Donald Trump urged the US Federal Reserve this past week to cut interest rates by at least 100 basis points and pursue quantitative easing. With the 2020 US presidential election on the horizon, Trump has a strong incentive to browbeat the Fed into keeping monetary policy as loose as possible and stave off any hint of an economic slowdown in the US. For equally self-serving reasons, I hope the Fed ignores Trump.

More than a year ago, I began holding much of the cash in my investment portfolios in the form of US dollars, because of the relatively high interest rates they offered. The risk I faced is that the Singapore dollar, as a matter of policy, is kept on an appreciating path versus a trade-weighted basket of currencies. But I figured that the relative strength of the US economy would keep the greenback firm against most major currencies, and that the Singapore dollar would probably display a weakening bias against it.

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