Singapore refrained from easing monetary policy again after a surprise move in January as it said its current stance was appropriate.
Gross domestic product grew an annualised 1.1% in the first quarter from the previous three months, when it grew 4.9%, the Singapore Trade Ministry said.
The Monetary Authority of Singapore (MAS), which uses the currency rather than interest rates to guide the economy, said in a statement Tuesday it will maintain its policy stance. The central bank reduced the pace of the local dollar’s appreciation against those of its trade partners in an unexpected move on Jan 28, after growth sagged in 2014 to its weakest in five years.
Eight of 15 economists surveyed by Bloomberg predicted the MAS would maintain the current stance, while the rest forecast it would ease.
“The risk-reward was probably to be more positioned in and around an easing rather than no change,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp in Singapore, said before the central bank’s announcement. “The risks are they will still have to move either later this year or at the October policy meeting if downside risks to the growth outlook materialise.”
The Singapore dollar rose 0.7% on Tuesday. A short position is a bet a currency will weaken.
The ringgit strengthened 0.2% to 3.7015 a dollar as of 10.18am in Kuala Lumpur (9.18am Thailand time), according to data compiled by Bloomberg. The currency has weakened 5.5% in 2015, the worst performance in Asia, as a slide in energy prices cut earnings for Malaysia, which is a net oil exporter.
The ringgit is likely to trade in a 3.68 to 3.70 range this week, with a reprieve in the oil-price slide the only supporting factor, said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd in Singapore. Brent crude has climbed 5% in the past four days.
“The ringgit benefited from the rally in the Singapore dollar, following the MAS decision this morning to leave its policy stance unchanged,” said Khoon Goh, a Singapore-based senior foreign-exchange strategist at Australia & New Zealand Banking Group. “Given the sharp depreciation in the ringgit yesterday, unwinding of short positions likely further contributed to the currency’s gains.”
The MAS guides the local dollar against a basket of its counterparts and adjusts the pace of its appreciation or depreciation by changing the slope, width and centre of a currency band. It doesn’t disclose details on the basket, or the band or the pace of appreciation or depreciation. The MAS has two scheduled policy announcements a year, one in April and the other in October.