Singapore’s central bank eased monetary policy for the second time in 2015 in an effort to revive growth. The local dollar strengthened.
The Monetary Authority of Singapore, which uses the currency rather than interest rates to guide the economy, said in a statement Wednesday it will reduce the slope of its currency band, lessening the rate at which its dollar will appreciate. It kept both the width of the band and the center unchanged.
The island state’s economy avoided a technical recession in the third quarter, expanding 0.1% from the previous three months, when it shrank a revised 2.5%, the trade ministry said Wednesday. Sixteen of 25 economists surveyed by Bloomberg predicted the MAS would boost stimulus, while the remainder predicted no move.
“We’ve seen some uncertainties or fireworks that threw some debate on the next MAS move,” Christy Tan, head of markets strategy at National Australia Bank Ltd. in Hong Kong, said before the policy decision. “The bias will be to trade dollar-Sing higher.”
The local dollar gained 0.5% to $1.3952 against the US currency as of 8.08am. It depreciated to $1.4366 on Oct. 2, the weakest level since September 2009.
The central bank guides the local dollar against a basket of its counterparts and adjusts the pace of its appreciation or depreciation by changing the slope, width and center of a currency band. It doesn’t disclose details on the basket, or the band or the pace of appreciation or depreciation. The MAS has two scheduled policy announcements a year, one in April and the other in October.
In January, the central bank held an unscheduled meeting and announced it would reduce the slope of the band, while retaining a “modest and gradual appreciation” of its currency against the basket.
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The Monetary Authority of Singapore, which uses the currency rather than interest rates to guide the economy, said in a statement Wednesday it will reduce the slope of its currency band, lessening the rate at which its dollar will appreciate. It kept both the width of the band and the center unchanged.
The island state’s economy avoided a technical recession in the third quarter, expanding 0.1% from the previous three months, when it shrank a revised 2.5%, the trade ministry said Wednesday. Sixteen of 25 economists surveyed by Bloomberg predicted the MAS would boost stimulus, while the remainder predicted no move.
“We’ve seen some uncertainties or fireworks that threw some debate on the next MAS move,” Christy Tan, head of markets strategy at National Australia Bank Ltd. in Hong Kong, said before the policy decision. “The bias will be to trade dollar-Sing higher.”
The local dollar gained 0.5% to $1.3952 against the US currency as of 8.08am. It depreciated to $1.4366 on Oct. 2, the weakest level since September 2009.
The central bank guides the local dollar against a basket of its counterparts and adjusts the pace of its appreciation or depreciation by changing the slope, width and center of a currency band. It doesn’t disclose details on the basket, or the band or the pace of appreciation or depreciation. The MAS has two scheduled policy announcements a year, one in April and the other in October.
In January, the central bank held an unscheduled meeting and announced it would reduce the slope of the band, while retaining a “modest and gradual appreciation” of its currency against the basket.
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