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http://www.channelnewsasia.com/news/singapore/singapore-dollar-still/2045946.html
Singapore
[h=1]Singapore dollar still within policy band in face of market volatility: MAS[/h][h=2]The Singapore dollar hit a five-year low, slipping to S$1.415 against the greenback on Wednesday (Aug 12). The Monetary Authority of Singapore says the monetary policy stance "remains appropriate".[/h]
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File picture of Singapore currency. (File photo: AFP/Roslan Rahman)
SINGAPORE: The Singapore dollar has remained within its policy band amid market volatility, said the Monetary Authority of Singapore (MAS) on Wednesday (Aug 12).
The Singapore dollar on Wednesday sunk to a new five-year low against the greenback at S$1.415 per US dollar, as investors reacted to a devaluation of the Chinese yuan for a second day in a row.
“MAS manages the Singapore dollar against a trade-weighted basket of currencies within a policy band, and does not focus on any specific bilateral exchange rate,” said the central bank in a statement in response to media queries. “This framework allows the Singapore dollar to adjust to short-term market fluctuations, while providing an anchor against undue volatility in the foreign exchange market.”
MAS added that the monetary policy stance announced in April “remains appropriate” in terms of the overall macroeconomic conditions, and that it is ready to curb excessive volatility in the Singapore dollar.
ANALYSTS WATCHING PEOPLE'S BANK OF CHINA'S NEXT MOVE
China moved for a second straight day on Wednesday to devalue its yuan, further weighing on regional currencies which are already facing pressure from a stronger greenback and prospects of an imminent Fed rate hike.
While the People's Bank of China said there is no basis for a sustained depreciation, analysts are keeping a close eye on its next move. They said volatility arising from China's policy could prompt the US Federal Reserve to hold off raising interest rates for the time being.
The Federal Reserve is scheduled to meet in September to discuss interest rate normalisation.
Said Mr Sim Moh Siong, FX strategist at Bank of Singapore: "The Fed does seem to want to start tightening this year. As to whether it could be delayed from September to December, I think that depends on the market situation, and how the spillover from the Chinese currency pans out. If there is more risk-off in the market and sustained sell-off in the equity market, then potentially it could delay the Fed tightening."
There are concerns that other central banks may follow suit and devalue their currencies, but market watchers said they expect MAS to maintain its policy stance ahead of the next policy meeting in October.
With Singapore's economy still growing within expectations, they added that it is unlikely the central bank will do anything to rock the boat.
Said Mr Vishnu Varathan, a senior economist at Mizuho Bank: "China has made this move, which means that the MAS need not be concerned over an overvalued Sing dollar, acting via the renminbi component of the trade basket, because that has corrected the Sing dollar against the US dollar – which has corrected. So on that standalone basis, the MAS does not need (change its policy stance)."
Mr Edward Lee, regional head of research for Southeast Asia at Standard Chartered Bank, said the MAS is comfortable with where the monetary policy is, given the growth and inflation outlook.
He said: "Now growth-wise, we are still on track for between 2 and 2.5 per cent growth as per the official forecast. I think that is still in line. And if we take a look at inflation, possibly headline inflation has some risk of downward adjustment in terms of their forecast, but just slight.
"Unless we are seeing maybe a one percentage point change to the downside in terms of inflation forecast, I would think that the MAS should keep its monetary policy settings unchanged in the middle of October."
At 5.30pm on Wednesday, the Singapore dollar was trading at 1.41 against the greenback. Against Asian units, it moved to 2.86 against the ringgit and 4.53 against the renminbi.
- CNA/xq/dl
Singapore
[h=1]Singapore dollar still within policy band in face of market volatility: MAS[/h][h=2]The Singapore dollar hit a five-year low, slipping to S$1.415 against the greenback on Wednesday (Aug 12). The Monetary Authority of Singapore says the monetary policy stance "remains appropriate".[/h]
- By Patrick John Lim
- POSTED: 12 Aug 2015 20:07
- UPDATED: 13 Aug 2015 00:16
<div>Please enable Javascript to watch this video</div>
SINGAPORE: The Singapore dollar has remained within its policy band amid market volatility, said the Monetary Authority of Singapore (MAS) on Wednesday (Aug 12).
The Singapore dollar on Wednesday sunk to a new five-year low against the greenback at S$1.415 per US dollar, as investors reacted to a devaluation of the Chinese yuan for a second day in a row.
“MAS manages the Singapore dollar against a trade-weighted basket of currencies within a policy band, and does not focus on any specific bilateral exchange rate,” said the central bank in a statement in response to media queries. “This framework allows the Singapore dollar to adjust to short-term market fluctuations, while providing an anchor against undue volatility in the foreign exchange market.”
MAS added that the monetary policy stance announced in April “remains appropriate” in terms of the overall macroeconomic conditions, and that it is ready to curb excessive volatility in the Singapore dollar.
ANALYSTS WATCHING PEOPLE'S BANK OF CHINA'S NEXT MOVE
China moved for a second straight day on Wednesday to devalue its yuan, further weighing on regional currencies which are already facing pressure from a stronger greenback and prospects of an imminent Fed rate hike.
While the People's Bank of China said there is no basis for a sustained depreciation, analysts are keeping a close eye on its next move. They said volatility arising from China's policy could prompt the US Federal Reserve to hold off raising interest rates for the time being.
The Federal Reserve is scheduled to meet in September to discuss interest rate normalisation.
Said Mr Sim Moh Siong, FX strategist at Bank of Singapore: "The Fed does seem to want to start tightening this year. As to whether it could be delayed from September to December, I think that depends on the market situation, and how the spillover from the Chinese currency pans out. If there is more risk-off in the market and sustained sell-off in the equity market, then potentially it could delay the Fed tightening."
There are concerns that other central banks may follow suit and devalue their currencies, but market watchers said they expect MAS to maintain its policy stance ahead of the next policy meeting in October.
With Singapore's economy still growing within expectations, they added that it is unlikely the central bank will do anything to rock the boat.
Said Mr Vishnu Varathan, a senior economist at Mizuho Bank: "China has made this move, which means that the MAS need not be concerned over an overvalued Sing dollar, acting via the renminbi component of the trade basket, because that has corrected the Sing dollar against the US dollar – which has corrected. So on that standalone basis, the MAS does not need (change its policy stance)."
Mr Edward Lee, regional head of research for Southeast Asia at Standard Chartered Bank, said the MAS is comfortable with where the monetary policy is, given the growth and inflation outlook.
He said: "Now growth-wise, we are still on track for between 2 and 2.5 per cent growth as per the official forecast. I think that is still in line. And if we take a look at inflation, possibly headline inflation has some risk of downward adjustment in terms of their forecast, but just slight.
"Unless we are seeing maybe a one percentage point change to the downside in terms of inflation forecast, I would think that the MAS should keep its monetary policy settings unchanged in the middle of October."
At 5.30pm on Wednesday, the Singapore dollar was trading at 1.41 against the greenback. Against Asian units, it moved to 2.86 against the ringgit and 4.53 against the renminbi.
- CNA/xq/dl
