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Singapore dollar seen sliding as central bank fights downturn

Bloomberg
Bloomberg10/9/2019 10:04 AM GMT+08  • 3 min read
Singapore dollar seen sliding as central bank fights downturn
(Oct 3): Singapore’s dollar is set to weaken because the central bank is likely to scrap its appreciation bias at a policy meeting next week, according to a growing group of forecasters.
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(Oct 3): Singapore’s dollar is set to weaken because the central bank is likely to scrap its appreciation bias at a policy meeting next week, according to a growing group of forecasters.

Mizuho Bank and Societe Generale SA are defying consensus by predicting the Monetary Authority of Singapore will adjust the slope of its nominal-effective-exchange-rate policy band to zero, from 1%, to counter slowing economic growth. Singapore’s dollar has already weakened 1.2% this year as the US-China trade war weigh on the outlook of the export dependent economy.

The local currency may “scream its way” to weaker than $1.40 per US dollar if MAS adjusts its bias to zero, said Vishnu Varathan, head of economics and strategy at Mizuho in Singapore. “US-China tariffs escalation, US-EU tensions, political uncertainties and wobbling asset confidence all bearing down suggest that the MAS has cause to remove the slope.”

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