Singapore dollar rises to 10-year high as inflation may quicken

The Singapore dollar rose to a decade high as the central bank allows faster appreciation to lower import prices and curb inflation. The currency was set for a second weekly gain before a government report Feb. 25 that economists forecast will show consumer prices climbed by the most in a quarter century. The Monetary Authority of Singapore, which guides its dollar within an undisclosed trading range, said in October it would "increase slightly the slope of the policy band."

Singapore's dollar advanced to S$1.4071, the highest since February 1997. Singapore's currency has climbed 2.8% against the U.S. dollar over the past month, the fifth-biggest gain among the currencies of Asia's 17 largest economies. The island uses the exchange rate instead of interest rates to guide monetary policy.

The government report may show prices jumped 5.6% last month from a year ago, the most since 1982, according to a Bloomberg survey of 12 economists. Singapore's Department of Statistics will release the report at 1 p.m. on Feb. 25. The MAS forecasts inflation will average between 4.5% and 5.5% in 2008, compared with 2.1% last year.

- Let's see if the economists get it right this time about the CPI inflation figures, or if they get surprised again. There is a limit as to how much MAS can let the SGD rise without affecting our export competitiveness, like was seen in Canada rather recently with the CAD when it rose too much too quickly and affected many businesses.

(2008-02-22 13:21:47 SGT) [Biz] Permalink

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