Singapore May Revalue Currency This Month, Morgan Stanley Says
October 01, 2010, 12:09 AM EDT
By Lilian Karunungan
Oct. 1 (Bloomberg) -- Singapore’s central bank may revalue its currency again at a twice yearly meeting this month because of the nation’s strong economic growth and balance of payments, according to Morgan Stanley.
The U.S. bank revised its year-end forecast for the Singapore dollar higher to S$1.28 against the greenback, from a previous estimate of S$1.35, in a report dated yesterday. The city-state’s dollar has gained 6.6 percent this year, the third- best performance among the most-traded Asian currencies excluding Japan, after the Monetary Authority of Singapore on April 14 unexpectedly revalued the exchange rate.
“The MAS will need to re-center the nominal effective exchange-rate band in order to allow more headroom for the Singapore dollar to move higher,” wrote Hong Kong-based analysts Stewart Newnham and Yee Wai Chong. “The combination of strong above-trend growth and a large external surplus is likely to continue to generate powerful, positive macro-dynamic support for the Singapore dollar.”
Morgan Stanley expects the Singapore economy to grow 16 percent this year and 6 percent in 2011, after contracting 1.3 percent in 2009. The balance of payments reached S$13.7 billion ($10.4 billion) in the three months through June, a fifth quarterly surplus, data from the department of statistics show.
The currency reached a record high of S$1.3131 against the U.S. currency today and was little changed at S$1.3147 as of 11:35 a.m. local time, according to data compiled by Bloomberg.
The central bank uses the exchange rate rather than interest rates to conduct monetary policy, adjusting the center slope or width of an undisclosed band of currencies in which the Singapore dollar is allowed to fluctuate.
The date of the Monetary Authority of Singapore’s meeting this month hasn’t yet been made public.
October 01, 2010, 12:09 AM EDT
By Lilian Karunungan
Oct. 1 (Bloomberg) -- Singapore’s central bank may revalue its currency again at a twice yearly meeting this month because of the nation’s strong economic growth and balance of payments, according to Morgan Stanley.
The U.S. bank revised its year-end forecast for the Singapore dollar higher to S$1.28 against the greenback, from a previous estimate of S$1.35, in a report dated yesterday. The city-state’s dollar has gained 6.6 percent this year, the third- best performance among the most-traded Asian currencies excluding Japan, after the Monetary Authority of Singapore on April 14 unexpectedly revalued the exchange rate.
“The MAS will need to re-center the nominal effective exchange-rate band in order to allow more headroom for the Singapore dollar to move higher,” wrote Hong Kong-based analysts Stewart Newnham and Yee Wai Chong. “The combination of strong above-trend growth and a large external surplus is likely to continue to generate powerful, positive macro-dynamic support for the Singapore dollar.”
Morgan Stanley expects the Singapore economy to grow 16 percent this year and 6 percent in 2011, after contracting 1.3 percent in 2009. The balance of payments reached S$13.7 billion ($10.4 billion) in the three months through June, a fifth quarterly surplus, data from the department of statistics show.
The currency reached a record high of S$1.3131 against the U.S. currency today and was little changed at S$1.3147 as of 11:35 a.m. local time, according to data compiled by Bloomberg.
The central bank uses the exchange rate rather than interest rates to conduct monetary policy, adjusting the center slope or width of an undisclosed band of currencies in which the Singapore dollar is allowed to fluctuate.
The date of the Monetary Authority of Singapore’s meeting this month hasn’t yet been made public.