SINGAPORE, April 14 — The Singapore dollar fell today after the central bank lowered its inflation outlook, while most emerging Asian currencies fell in response to the overall strength in the US dollar.

The city-state’s currency fell 0.2 per cent to 1.2515 to the greenback as of 0135 GMT as investors took profits from long positions, which they had built up before the central bank’s semi-annual monetary policy meeting.

Earlier, the Monetary Authority of Singapore slightly trimmed its forecast for headline inflation in 2014 to 1.5-2.5 per cent from 2-3 per cent previously, while keeping core inflation forecast at 2-3 per cent.

The central bank stuck to a tight monetary policy stance, saying it will maintain its policy of allowing a “modest and gradual” appreciation of the Singapore dollar, with no changes to the slope, width or centre of the policy band.

“US dollar/Singapore dollar will remain close to mid-point and likely to rise as some of the long Singapore dollar positions ahead of the policy announcement are closed,” said Saktiandi Supaat, head of FX research at Maybank.

The broad gains in the US dollar put further pressure in the Singapore dollar, he added.

The Singapore dollar had risen more than 2 per cent since March 20, when it hit a near two-month low, as investors built up their holdings before the monetary policy meeting.

Some traders expected further corrections in the Singapore dollar.

“If 1.25 (in the US dollar/Singapore dollar) is supported today, the next level would be 1.2580-1.2600,” said a European bank trader in Singapore, adding investors may look to buy the greenback around 1.2510-1.2515.

Still, the longer-term outlook for the Singapore dollar remained brighter than other emerging Asian currencies as the central bank kept policy tight, saying core inflation will remain elevated, analysts said, noting Singapore’s external balance was also better than its neighbours.

“We still view today’s decision as medium-term anchor for the SGD as it keeps an estimated 2 per cent annual appreciation trend,” HSBC said in a note to clients, referring to the Singapore dollar.

HSBC said it looked for chances to be long the Singapore dollar against the Thai baht, the Malaysian ringgit and the Philippine peso. — Reuters