SINGAPORE (Apr 3): In a one-two punch, Singapore’s central bank last week announced it was easing its exchange-rate based monetary policy. This comes four days after the government unveiled a $48.4 billion secondary Budget on March 26 to combat the economic impact of the Covid-19 pandemic.

In its latest half-yearly monetary policy review on March 30, the Monetary Authority of Singapore (MAS) said it was reducing the rate of the Singapore dollar’s appreciation to zero, at the prevailing level of the Singapore Dollar Nominal Effective Exchange Rate (S$NEER). This effectively weakens the Singapore dollar through a re-centring of the mid-point of the policy band, while keeping its width unchanged.

As it is, the S$NEER was fluctuating around 0.6% below the mid-point before MAS made the decision. This suggests that the S$NEER had been re-centred 60bps lower (See chart 1).

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