The Monetary Authority of Singapore (MAS) on Tuesday said it will maintain its policy to allow a modest and gradual appreciation of the Singapore dollar.
This follows the government’s announcement that the country’s GDP is on track and is expected to grow by 2.0 to 4.0 percent this year. MAS added that there is no change to the inflation outlook.
“External price pressures should be contained, while domestic cost pass-through to consumer prices is expected to be moderate this year. Beyond the near term, underlying cost and price pressures could pick up, given the continued tightness in the labour market.
“MAS will therefore maintain the policy of a modest and gradual appreciation of the S$NEER policy band. There will be no change to the slope and width of the policy band, and the level at which it is centred,” said the central bank, adding that the policy stance is consistent with the benign inflation outlook and moderate growth prospects for the whole of 2015, and “appropriate for ensuring medium-term price stability in the economy”.
In January, MAS implemented a surprise monetary policy adjustment to slow the appreciation of the Singapore dollar by reducing the slope of the Singapore dollar nominal effective exchange rate (S$NEER), citing a benign inflation outlook.
The government enforces the monetary policy by managing the exchange rate against a basket of major currencies. The exchange rate is allowed to float within a policy band of which MAS can tweak when it reviews monetary policy twice every year.
Meanwhile, a Bloomberg report revealed that the Singapore dollar increased sharply following the announcement from MAS. The local currency jumped about 0.8 percent to 1.3610 per US dollar. It is noted that before Tuesday’s announcement, the currency weakened to 1.3746 from a previous close of 1.3714.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg
