Singapore Stalls Currency; Fears for Global Rebound

Reuters – 12 October 2009

Singapore's central bank decided against encouraging currency appreciation at a policy review on Monday, saying it lacked faith in the global recovery and feared slower growth in the island's export-dependent economy.

The Monetary Authority of Singapore (MAS) uses the currency as its main policy tool, and traders had pushed it higher, anticipating the central bank would tolerate more appreciation as the economy rebounded strongly from recession earlier this year.

The central bank kept policy on hold even though gross domestic product grew a seasonally adjusted 14.9 percent in the third quarter compared with the previous three months, beating forecasts as services and manufacturing surged.

The central bank said it did not think the Singaporean economy could sustain that pace of recovery while demand sputters in its Western export markets.

'While prospects for the external economies have improved, final demand in Singapore's key export markets...has yet to recover decisively,' the bank said in statement.