The Monetary Authority of Singapore (MAS) further tightened monetary policy on Thursday in a bid to address a sharp rise in inflation, allowing the Singapore dollar to continue to rise against other currencies.
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The move sent the Singapore dollar to all-time highs at US$1.3623 in morning trade, against 1.3810 late Wednesday. In its semi-annual policy statement, the MAS said consumer prices have risen sharply since the second half of last year, reflecting both external and domestic factors.
From 0.8 per cent in the first half of last year, consumer price index (CPI) inflation accelerated to 6.6 per cent in January-February, MAS said.
The MAS conducts monetary policy through the local currency rather than by setting interest rates.
The Singapore dollar is traded against a basket of currencies of the city-state's major trading partners within an undisclosed trading band known as the nominal effective exchange rate (NEER).
Since its last policy review in October, the NEER has fluctuated in the upper half of the band, MAS said.
"Against this backdrop of continuing external and domestic cost pressures, an upward shift of the policy band at this point will help to moderate inflation going forward, while providing support for sustainable growth in the economy," it said.
"MAS will therefore re-centre the exchange rate policy band at the prevailing level of the NEER."
Details of the trading band are not made public to prevent speculation in the Singapore dollar.
The government on Thursday said Singapore's economy grew at a faster 7.2 per cent in the first quarter of the year, in a report that beat the average forecast made by economists.
On April 11 last year, the Singapore dollar was trading at US$1.5182. - AFP/ac
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