Singapore’s Heng Says ’Wrong’ to Expect Bigger Currency Drop
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By Eugene Tang
April 18 (Bloomberg) -- Traders who expected Singapore to weaken its currency more than this week’s depreciation were “wrong” because there’s no reason for any “undue weakening,” the Monetary Authority of Singapore’s managing director said.
Singapore’s central bank lowered the local currency’s trading band on April 14 after its twice-yearly policy review. DBS Group Holdings Inc., HSBC Holdings Plc, UBS AG and Westpac Banking Corp. said they expected a bigger devaluation than announced.
“We see no reason for any undue weakening of the Singapore dollar,” the MAS Managing Director Heng Swee Keat said today at the Boao Forum in southern China’s Hainan province, reiterating last week’s MAS statement. “The market was wrong” if it had expected a steeper devaluation, he said.
The city state’s economy may shrink by as much as 9 percent this year, the most since independence in 1965, as a deepening global recession drives down exports and manufacturing. The government previously predicted a decline of as much as 5 percent.
First-quarter gross domestic product fell by an annualized 19.7 percent from the previous three months, more than double the 9.6 percent shrinkage forecast in a Bloomberg economist survey.
The central bank said it would adjust the trading range for the Singapore dollar, effectively lowering the band for the first time since 2003 to revive growth. The move was forecast by 15 of 17 economists surveyed by Bloomberg News last month.
“The current level of the Singapore dollar nominal effective exchange rate is appropriate for maintaining domestic price stability over the medium term, taking into account the prospects for growth in the Singapore economy,” the central bank said in its April 14 statement. “MAS will therefore re-centre the exchange rate policy band to the prevailing level of the Singapore dollar nominal effective exchange rate.”
Singapore’s dollar, which weakened almost 10 percent in the past 12 months, fell 0.2 percent to close at S$1.5017 versus the U.S. currency at the end of Friday trading. DBS, Singapore’s biggest bank, kept its forecast for the currency to weaken 3.7 percent to S$1.56 by the end of June.
To contact the reporter on this story: Eugene Tang in Beijing at [email protected]
Share | Email | Print | A A A
By Eugene Tang
April 18 (Bloomberg) -- Traders who expected Singapore to weaken its currency more than this week’s depreciation were “wrong” because there’s no reason for any “undue weakening,” the Monetary Authority of Singapore’s managing director said.
Singapore’s central bank lowered the local currency’s trading band on April 14 after its twice-yearly policy review. DBS Group Holdings Inc., HSBC Holdings Plc, UBS AG and Westpac Banking Corp. said they expected a bigger devaluation than announced.
“We see no reason for any undue weakening of the Singapore dollar,” the MAS Managing Director Heng Swee Keat said today at the Boao Forum in southern China’s Hainan province, reiterating last week’s MAS statement. “The market was wrong” if it had expected a steeper devaluation, he said.
The city state’s economy may shrink by as much as 9 percent this year, the most since independence in 1965, as a deepening global recession drives down exports and manufacturing. The government previously predicted a decline of as much as 5 percent.
First-quarter gross domestic product fell by an annualized 19.7 percent from the previous three months, more than double the 9.6 percent shrinkage forecast in a Bloomberg economist survey.
The central bank said it would adjust the trading range for the Singapore dollar, effectively lowering the band for the first time since 2003 to revive growth. The move was forecast by 15 of 17 economists surveyed by Bloomberg News last month.
“The current level of the Singapore dollar nominal effective exchange rate is appropriate for maintaining domestic price stability over the medium term, taking into account the prospects for growth in the Singapore economy,” the central bank said in its April 14 statement. “MAS will therefore re-centre the exchange rate policy band to the prevailing level of the Singapore dollar nominal effective exchange rate.”
Singapore’s dollar, which weakened almost 10 percent in the past 12 months, fell 0.2 percent to close at S$1.5017 versus the U.S. currency at the end of Friday trading. DBS, Singapore’s biggest bank, kept its forecast for the currency to weaken 3.7 percent to S$1.56 by the end of June.
To contact the reporter on this story: Eugene Tang in Beijing at [email protected]
