The Singapore economy grew at a respectable rate of 1.8% on a quarterly basis for Q1/2016 which was above analysts’ expectations of 1.6%. Despite the decent growth, the Monetary Authority of Singapore (MAS) surprised the market by announcing a new policy last Thursday to basically stop the appreciation of the Singapore dollar (SGD).
The SGD immediately weakened against the USD and in the first hour alone, weakened 0.85% from S$1.3502 to S$1.3617 to one US dollar. The MAS has not made such a move since the 2008 Global Financial Crisis. This means, in my opinion, that the MAS foresees tougher economic conditions ahead and is preparing the local economy accordingly for it.
