Friday, November 21

S'pore monetary policy stays

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Nov 21, 2008
S'pore monetary policy stays
S$ slips after data confirms recession.

SINGAPORE'S central bank will take action to contain excess volatility in the Singapore dollar , the Monetary Authority of Singapore's Executive Director Edward Robinson said on Friday.

Mr Robinson told journalists that the currency's nominal effective exchange rate, or NEER, had remained within the central bank's secret policy band.

The Singapore dollar slipped slightly on Friday, but stayed firmer than the previous day's 15-month trough, after data showed the economy was weaker than initially estimated in the third quarter.

The currency fell to 1.5331 per US dollar, traders said, compared with Thursday's close of 1.5304 and levels of 1.5324 just before the data. It had fallen to 1.5335 in the previous session.

'The numbers were a shade worse than expected,' said Mr Emmanuel Ng, a strategist at OCBC Bank, adding that inflation forecasts had also been lowered.

'On the back of this, markets may continue to see upside for the USD-SGD in line with the regionals, although continued official presence on top may contain discreet jumps in the spot.'

Analysts believe Singapore's central bank will gradually ease policy further over the next few months, through a weaker currency, to support consumers in the heavily trade-weighted economy.

Monetary policy in Singapore is run by guiding the trade-weighted currency within a secret policy band. The Monetary Authority of Singapore (MAS) eased policy in October by shifting to a zero appreciation path for the trade-weighted currency.

Singapore's economy shrank at an annualised, seasonally adjusted rate of 6.8 per cent in the third quarter, final government data showed on Friday, confirming the export-dependent country's first recession since 2002. -- THOMSON REUTERS
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