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SINGAPORE: The Monetary Authority of Singapore (MAS) said on Monday it would maintain its policy of "zero per cent appreciation" for the city's dollar, despite data pointing to a modest recovery from recession.
Figures earlier in the day showed Singapore's economy grew slightly
year-on-year in the three months to September, leading the government to raise its forecast for the year.
However, the de facto central bank said in a statement it would aim to keep the Singapore dollar at its current level as there was still some way to go for a real turnaround for the city's key exports.
"While prospects for the external economies have improved, final demand in Singapore's key export markets, including for IT products, has yet to recover decisively," the MAS said in a statement.
It said it would therefore hold the "policy stance of a zero per cent appreciation" of the nominal effective exchange rate (NEER), a trading band that compares the local unit with a basket of currencies from the city's trading partners.
Singapore does not rely on interest rates to conduct monetary policy because of the economy's reliance on exports and the city-state imports virtually all of its food and other needs.
The economy grew by an estimated 0.8 per cent in the three months to September from a year ago, official figures showed Monday.
It was the trade-dependent city's first year-on-year expansion in five quarters and was based on July and August numbers. The estimate is expected to be revised when the full September numbers are available next month.
The Ministry of Trade and Industry, in a statement earlier Monday, upgraded its 2009 outlook to a contraction of 2.0 to 2.5 per cent from the previous estimate of negative 4.0 to 6.0 per cent growth.
But the MAS said: "Against continuing weakness and uncertainties in the external economic environment, the strength of the recovery in the Singapore economy is expected to be moderate beyond the initial uplift.
"There will be no change to the width of the policy band and the level at which it is centred."
Consumer spending in the US, a key export market for Singapore, is expected to remain sluggish while companies are likely to be remain cautious when it comes to investment, the central bank noted in its semi-annual policy review statement.
- AFP/ir
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