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SGD makes brief gains following MAS's monetary easing
THE Singapore dollar made a brief rally on Monday morning, shortly after the central bank eased monetary policy in a widely anticipated move due to expectations of a coronavirus-led slowdown.
At 8.02am, the Singapore dollar strengthened to 1.4217 against the US dollar, from 1.4268 at the close of Friday, before weakening again half an hour later, touching 1.4293 shortly before 9am. As at mid-morning however, the Singdollar began to trend towards strengthening again and as at noon, it is at 1.426 against the US dollar.
The Singdollar's moves came after the Monetary Authority of Singapore (MAS) said on Monday it was adopting a zero per cent per annum rate of appreciation of the policy band starting at the prevailing level of the Singdollar nominal effective exchange rate.
Analysts believe the central bank's move is meant to complement last week's fiscal boost. Deputy Prime Minister and Finance Minister Heng Swee Keat on Thursday unveiled a historic S$48 billion support package to rescue Singapore's economy, as authorities now expect the economy to shrink by 1 to 4 per cent in 2020.
Han Tan, market analyst at FXTM, said the limited moves in the currency markets following the announcement did not come as a surprise given that the MAS's neutral approach for the Singdollar had been widely expected, with a possible recession now looming.