MAS released their monetary policy yesterday. The strength of the Singapore Dollar currency is determined by the Nominal Effective Exchange Rate (S$NEER) which MAS adopts.
MAS decided that the exchange rate policy band would be re-centered to the existing value, while keeping the zero percent appreciation path.
The modest devaluation of the Singapore dollar led to a slight rally in the currency as the market was expecting a higher devaluation amidst a 16.4% quarter-on-quarter contraction in the economy.
Singapore’s GDP growth forecast for 2009 has been lowered to between -9% and -6%.
CPI figures dropped to 2.4% year-on-year in Jan-Feb 2009, and is expected to be between -1% and 0% for the whole of 2009.