SGD

SGD: MAS eases its monetary policy for the first time since its Apr 2009 meeting amid a worsening global economic outlook, in line with market expectations. The central bank will reduce the slope of its policy band upward but won't change the width of its SGD policy band nor recenter the band. StanChart estimates MAS to have reduced the slope of the SGD NEER appreciation path to 2% from 3.25%.
"With final demand in the advanced economies softening, growth in Asia will slow, notwithstanding some support from domestic demand," the MAS says. It also says economic growth in the city-state could fall below the potential rate of 3-5% in 2012. It expects the fall in economic activity will reduce the tightness in the labor market and other prices. The move suggests the central bank and Spore govt have shifted to a much more wary stance on global economic conditions. MAS also cited that the expected moderation in core inflation as a reason for easing policy.
The USD/SGD falls sharply to a three-week low of 1.2686 after the better-than-expected Singapore 3Q GDP numbers while the MAS policy easing was broadly as the market expected. DBS tips a 1.2600-1.2975 band in the near term.