-- DBS CEO warns central-bank easing could spur disruptive capital inflows into Asia.

-- Its CIO tips buying the Australian dollar if it dips to US$0.96.

-- He also says crude oil looks very good value at current levels.

(Adds comments on Danamon, currencies and oil starting from the fifth paragraph.)

 
   By Natasha Brereton-Fukui

SINGAPORE--DBS Group Holdings Ltd. (D05.SG) Chief Executive Officer Piyush Gupta said Thursday that he expects western central banks to ease policy further in the near future, causing capital inflows into Asia and potentially volatility in regional asset prices.

Addressing clients in Singapore, Mr. Gupta said he saw quite a high likelihood of the U.S. Federal Reserve implementing another round of stimulus in the next couple of weeks, given recent lacklustre data.

"If there's monetary policy easing in Europe or in the U.S., as I think there will be, then you will see again in Asia a whole flood of money coming in like what happened last year in July and August," Mr. Gupta said.

"When a lot of money flows into Asia, that plays havoc with currency rates and interest rates. And therefore, there is a case to expect to see volatility in currency rates and interest rates on the back of easing policy in the West," he said.

In April, DBS announced a $7.3 billion acquisition of Indonesia's PT Bank Danamon (BDMN.JK), which would give the Singaporean banking group a majority stake. But it remains unclear whether the deal will proceed, given planned changes to Indonesian bank-ownership rules.

Late last month, a senior official at Indonesia's central bank said that some local and foreign banks would still be allowed to own up to 99% of an Indonesian lender if they fulfilled certain requirements--contrary to some indications that 40% would be the limit.

Mr. Gupta didn't raise the matter in his remarks. Asked later whether DBS would be open to making any concessions to clinch the deal, he said merely that DBS had no inputs on Danamon at this stage.

At the same event, DBS Chief Investment Officer Lim Say Boon said it was hard to see any directional trend among major currencies, and that he would look to those currencies leveraged off Asia ex-Japan and China, such as the Australian dollar, for strength.

"Fair enough, the Aussie at $1.03...is probably too expensive, it's probably going to correct again as equities markets start correcting again," he said. The currency's correlation with China's purchasing managers' index could lead it lower to $0.96 over the next few months, but that would be "very good value," he said, tipping it to appreciate after that.

He also said he saw the euro as being in a broad downtrend channel. Any rebound in the currency would be likely to stop around $1.28, with $1.30 being the "absolute maximum" if the rally was particularly exuberant. But he said it was then likely to pull back toward $1.20 over the next three to six months, and could fall below that level over a 12-month period.

Mr. Lim said he viewed crude oil as being "very good value" at current levels--although it could correct a little further when risk aversion returns--having seemingly priced in a slowdown in China and recession in the euro zone, but not risks posed by Iran.

Write to Natasha Brereton-Fukui at natasha.brereton-fukui@dowjones.com