SINGAPORE'S central bank will favour a stronger currency by October to curb inflation and catch up with regional peers in withdrawing economic stimulus, a Bloomberg news survey of economists showed.
The Monetary Authority of Singapore (MAS) will seek a strengthening as early as its twice-yearly review this month, according to six of 13 economists in the survey, reported on Wednesday.
12 expect an appreciation by October with one undecided. MAS uses the exchange rate, rather than interest rates, to conduct monetary policy. It guides the Singapore dollar against a basket of currencies within an undisclosed band. The currency has risen 0.5 per cent so far this year, lagging behind a 7 per cent gain in Malaysia's ringgit and a 5 per cent advance in India's rupee.
Consumer prices rose 1 per cent in February from a year earlier, the fastest pace since March last year, compared with a 0.2 per cent increase in January, official data show. 'MAS doesn't want to be seen as being behind the curve,' Sebastien Barbe, head of emerging-market research at Credit Agricole CIB in Hong Kong told Bloomberg. 'The central bank wants to manage inflation expectations.'
Singapore's currency traded at S$1.3951 per US dollar as of 8.40 am, according to data compiled by Bloomberg. Its value has fallen 0.3 per cent since the last central bank meeting on Oct 12, making it the worst performer among Asia's 10 most- active currencies outside Japan. The currency will rise 1.1 per cent to S$1.38 by June 30, according to the median estimate in a Bloomberg News survey.
Policy makers from India to China have begun withdrawing monetary stimulus this year, seeking to check asset-price bubbles as the region leads global growth. China has twice ordered banks to increase the share of their assets held in reserve. India increased interest rates last month for the first time in almost two years, while Australia's central bank has raised borrowing costs in five out of the past six meetings.
[SOURCE: http://www.straitstimes.com]
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