SINGAPORE, April 14 — In a move that caught the market by surprise, the Monetary Authority of Singapore (MAS) announced today that it would remove the appreciation stance on the Singapore dollar, citing a “more modest” growth prospects than envisaged in its policy review in October.

The Singapore dollar fell after the announcement by MAS. At about 8.40am, the Singapore currency was at its weakest against the greenback since March 29, Reuters reported.

According to the Singapore central bank’s latest Monetary Policy Statement on Thursday (April 14) morning, the Singapore dollar will stay neutral against an undisclosed basket of currencies from April 14.

But the width of the Singapore currency’s nominal effective exchange rate (S$NEER) band and the level at which it is centred will be kept unchanged, the central bank said.

This is a move away from the “modest and gradual appreciation” stance that MAS has adopted for the Singapore dollar since October 2012. It is also the third time the central bank has eased monetary policy in recent times. The MAS previously announced in January and October last year that it would allow the currency to appreciate at a slower pace against its trading partners.

On its latest move, the central bank said: “This is not a policy to depreciate the domestic currency, and only removes the modest and gradual appreciation path of the S$NEER policy band that was in place.”

Separately today, the Ministry of Trade and Industry released advance estimates that showed the Singapore economy expanding 1.8 per cent year-on-year in the first quarter, while remaining flat quarter-on-quarter.

MAS said the Singapore economy is projected to expand at a more modest pace in 2016 than envisaged in its October policy review, as the outlook for global economy has dimmed. It added that Singapore’s major trading partners will continue to pose cyclical headwinds for the external-oriented sectors here.

The expansion of the US economy is expected to be more modest than anticipated, while economic activity in the Eurozone and Japan will be dampened by their appreciating currencies and weak external demand.

The MAS Core Inflation should also pick up more gradually over the course of 2016 than previously anticipated.

“The actual outcome of S$NEER movements over the six months since October 2015 has in fact been a zero percent appreciation compared to the preceding six-month period. The cumulative effects of past S$NEER movements and the new policy path will continue to ensure price stability over the medium term,” MAS said. ― TODAY