SINGAPORE: On the back of strong economic growth, the Monetary Authority of Singapore (MAS) will allow the Singapore dollar to rise in the first tightening of its exchange rate-based monetary policy in six years.
In its policy statement on Friday (Apr 13), MAS said it would slightly increase the slope of the Singapore dollar's policy band from zero per cent previously, while keeping the width and mid-point of the band unchanged.
"This policy stance is consistent with a modest and gradual appreciation path of the S$NEER (Nominal Effective Exchange Rate) policy band that will ensure medium-term price stability," the authority said.
"The Singapore economy is likely to remain on its steady expansion path in 2018," said MAS, after the Ministry of Trade and Industry announced a GDP growth of 4.3 per cent in the first quarter of this year - up from 3.6 per cent in the previous quarter, according to advance estimates.
"Upward pressures on MAS Core Inflation are expected to persist over the course of this year and beyond, underpinned by an improving labour market."
MAS said the adjustment takes into account the "uncertainty in macroeconomic outcomes presented by ongoing trade tensions", adding that it will continue to closely monitor economic developments.
AdvertisementAdvertisementThe MAS manages monetary policy through exchange rate settings, rather than interest rates, letting the Singapore dollar rise or fall against the currencies of its main trading partners within in an undisclosed policy band based on its nominal effective exchange rate.
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