Singapore Dollar Hits Record High as 13% Growth Target Assured

October 14, 2010

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Singapore. The Singapore dollar hit a record high after the central bank moved to tighten monetary policy as fresh data affirmed forecasts the economy could grow 13 percent to 15 percent this year.

Despite concern over rising currencies in the region, the Monetary Authority of Singapore highlighted inflation as its main concern, pushing the unit to as high as 1.2886 against the dollar.

This contributed to further US dollar weakness in Asian trade, with the euro touching $1.41 for the first time in nine months.

A stronger Singapore dollar will lower the cost of imports for the city-state, which buys most of its needs from abroad.

The Ministry of Trade and Industry said the economy expanded 10.3 percent year-on-year in the third quarter.

While slower than the second quarter’s 19.6 expansion, the July-September data showed Singapore was on track to achieve blistering growth projections after last year’s 1.3 percent contraction caused by the global downturn.

The MAS said that while gross domestic product growth was slowing to a “more sustainable pace,” domestic cost pressures were rising due to the “high level of resource utilization” and tight labor market.

“Thus, the balance of risks is weighted toward inflation going forward,” the central bank said.

It projects underlying inflation to average 2 percent this year and 2 percent to 3 percent in 2011.

Singapore’s monetary policy is conducted via the local dollar, which is traded against a basket of currencies of its major trading partners within an undisclosed band.


Agence France-Presse

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