Singapore increases slightly slope of currency policy band
SINGAPORE: The Monetary Authority of Singapore’ has increased slightly the slope of the currency policy band, or Singapore Dollar Nominal Effective Exchange Rate (S$NEER), on the back of expected steady economic growth and the projected modest rise in inflation.
The central bank said the width of the policy band and the level at which it was centred would be unchanged.
“This measured adjustment follows the slight increase in the slope of the policy band in April 2018 from zero percent previously, and is consistent with a modest and gradual appreciation path of the S$NEER policy band that will ensure medium-term price stability,” MAS said in an online statement yesterday.
The Singapore dollar is managed against a basket of currencies of its major trading partners and competitors. The various currencies are assigned weights in accordance with the importance of the country to Singapore’s trading relations with the rest of the world.
The trade-weighted exchange rate is allowed to fluctuate within a policy band, a mechanism to accommodate short- term fluctuations in the foreign exchange markets and flexibility in managing the exchange rate.
According to MAS, the Singaporean economy is likely to remain on its steady expansion path in the quarters ahead, keeping output slightly above potential.
It said MAS Core Inflation rate would experience modest but continuing pressures, before levelling off at just below 2.0 per cent over the medium term.
In a separate statement, Singapore’s Ministry of Trade and Industry (MTI) said based on advance estimates, the Singaporean economy grew 2.6 per cent on a year-on-year basis in the third quarter of 2018, moderating from the 4.1 per cent growth in the previous quarter.
The advance Gross Domestic Product (GDP) estimates for the third quarter of 2018 are largely computed from data in the first two months of the quarter, July and August 2018.
On a quarter-on-quarter seasonally-adjusted annualised basis, Singapore’s economy expanded 4.7 per cent, faster than the 1.2 per cent growth in the preceding quarter.
MTI will release the preliminary GDP estimates for the third quarter, including performance by sectors, sources of growth, inflation, employment and productivity, in its Economic Survey of Singapore in November 2018.
Singapore’s GDP growth forecast for 2018 ranges from 2.5 to 3.5 per cent. — Bernama