Singapore’s central bank devalued its currency less aggressively than expected in a monetary policy review yesterday, signaling growing confidence that the global economy is bottoming out.
The Monetary Authority of Singapore repeated what it had done in previous downturns in 2002 and 2003 by shifting the center of the secret trade-weighted band for the Singapore dollar down to the existing level of the exchange rate basket, effectively a devaluation.
Based on their estimates of the policy band the Singapore dollar is managed in, economists said the currency might have been devalued by 1.5 percent to 2 percent.
PHOTO: AFP
Yesterday’s monetary easing came as Singapore’s economy contracted a record 11.5 percent from a year earlier in the first quarter of this year, more than a market median forecast of an 8.8 percent slump. The government expects the economy to shrink between 6 percent and 9 percent this year.
The bank said the economy is likely to remain below its potential growth rate until a decisive recovery in exports.
The policy easing appeared inadequate to most analysts. JPMorgan Chase strategist Claudio Piron said the Monetary Authority of Singapore had been conservative.
“There had been some expectation that the re-centering would be as much as a 400 basis points depreciation,” he said.
Others pointed to subtle hints of optimism in the central bank’s statement, such as the allusions to Singapore’s “sound fundamentals,” and references to a pick up in leading indicators and improved consumption in the US.
“The statement was somewhat optimistic with the usual dose of cautiousness,” said Emmanual Ng, strategist at OCBC Bank.
Other data yesterday meanwhile suggested Singapore’s open economy — exports including re-exports are double the total economic output — could be nearing a trough.
Non-oil exports (NODX) fell 17 percent from a year earlier last month after a record 35 percent plunge in January and a 24 percent fall in February. Shipments to China jumped 14 percent last month.
“Although we are seeing some faint heartbeats in the Singapore economy with better-than-expected March NODX numbers, we have not seen the bottom yet,” said Song Seng Wun (宋誠煥), economist at Malaysian bank CIMB in Singapore. “With inflation easing and external demand fragile, the shift in policy remains appropriate.”
“Given all these horrendous numbers, this policy change is not a big surprise. It is reflecting the free fall in external demand,” Song said.
The Singapore dollar, which has been emerging Asia’s second-worst performing currency this year, strengthened to a two-month high of S$1.497 against the US dollar from S$1.515 before the announcement, and was trading at S$1.5005 by 0600 GMT.
NO-LIMITS PARTNERSHIP: ‘The bottom line’ is that if the US were to have a conflict with China or Russia it would likely open up a second front with the other, a US senator said Beijing and Moscow could cooperate in a conflict over Taiwan, the top US intelligence chief told the US Senate this week. “We see China and Russia, for the first time, exercising together in relation to Taiwan and recognizing that this is a place where China definitely wants Russia to be working with them, and we see no reason why they wouldn’t,” US Director of National Intelligence Avril Haines told a US Senate Committee on Armed Services hearing on Thursday. US Senator Mike Rounds asked Haines about such a potential scenario. He also asked US Defense Intelligence Agency Director Lieutenant General Jeffrey Kruse
INSPIRING: Taiwan has been a model in the Asia-Pacific region with its democratic transition, free and fair elections and open society, the vice president-elect said Taiwan can play a leadership role in the Asia-Pacific region, vice president-elect Hsiao Bi-khim (蕭美琴) told a forum in Taipei yesterday, highlighting the nation’s resilience in the face of geopolitical challenges. “Not only can Taiwan help, but Taiwan can lead ... not only can Taiwan play a leadership role, but Taiwan’s leadership is important to the world,” Hsiao told the annual forum hosted by the Center for Asia-Pacific Resilience and Innovation think tank. Hsiao thanked Taiwan’s international friends for their long-term support, citing the example of US President Joe Biden last month signing into law a bill to provide aid to Taiwan,
China’s intrusive and territorial claims in the Indo-Pacific region are “illegal, coercive, aggressive and deceptive,” new US Indo-Pacific Commander Admiral Samuel Paparo said on Friday, adding that he would continue working with allies and partners to keep the area free and open. Paparo made the remarks at a change-of-command ceremony at Joint Base Pearl Harbor-Hickam in Hawaii, where he took over the command from Admiral John Aquilino. “Our world faces a complex problem set in the troubling actions of the People’s Republic of China [PRC] and its rapid buildup of forces. We must be ready to answer the PRC’s increasingly intrusive and
STATE OF THE NATION: The legislature should invite the president to deliver an address every year, the TPP said, adding that Lai should also have to answer legislators’ questions The Chinese Nationalist Party (KMT) yesterday proposed inviting president-elect William Lai (賴清德) to make a historic first state of the nation address at the legislature following his inauguration on May 20. Lai is expected to face many domestic and international challenges, and should clarify his intended policies with the public’s representatives, KMT caucus secretary-general Hung Meng-kai (洪孟楷) said when making the proposal at a meeting of the legislature’s Procedure Committee. The committee voted to add the item to the agenda for Friday, along with another similar proposal put forward by the Taiwan People’s Party (TPP). The invitation is in line with Article 15-2