Singapore, one of the world’s most open economies, fittingly expects to be one of its fastest sinking. After a ghastly first quarter the government now forecasts full-year shrinkage of between 6 and 9 per cent.
What to do? By “re-centring” the policy band that pegs the Singapore dollar to an (undivulged) basket of currencies, the Monetary Authority of Singapore gains a pitifully modest devaluation – estimated by analysts at about 1-2.5 per cent. MAS was careful to attach some suitably tough language, in effect putting currency traders on notice that more aggressive action will not follow.
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