In a surprise move, Singapore’s central bank eased its monetary policy, depreciating the country’s currency to its weakest since 2010 against the greenback and sending the country-specific exchange traded fund tumbling on increased uncertainty.
The iShares MSCI Singapore ETF (NYSEArca: EWS) fell 1.2% Wednesday while the iShares MSCI Singapore Small-Cap ETF (NYSEArca: EWSS) decreased 1.4%. Year-to-date, EWS dipped 1.2% and EWSS rose 2.6%.
Meanwhile, the Guggenheim CurrencyShares Singapore Dollar Trust (NYSEArca: FXSG) dropped 1.0% Wednesday. The Singapore dollar dipped to S$1.3512 per USD Wednesday, the weakest since September 2010 and has declined 6% against the greenback over the past three motnhs, the third largest loser among 11 most-traded Asian currencies. FXSG is down 1.1% year-to-date.
The Monetary Authority of Singapore made an unscheduled statement Wednesday, revealing it will seek a slower pace of appreciation against a basket of foreign currencies, reports Sharon Chen for Bloomberg.
It was the first emergency policy change since September 11, 2011, reflecting the potential uncertainty in the country’s growth outlook. The central bank only has two scheduled policy announcements per year.
“They’re essentially trying to stay ahead” by moving before the scheduled April policy review, Song Seng Wun, an economist at CIMB Research, said in the article. “We’ve already seen so many central banks cut. For Singapore to do such an unscheduled move, it has to be against the backdrop of enormous uncertainty.”
Singapore is the latest of nine countries to ease monetary policies this month. For instance, the European Central Bank announced an aggressive bond purchasing program while Canada, Denmark and India have cut interest rates. More central banks may follow suit, with the Bank of Japan chief stating that the country could require additional stimulus and Thai policy makers facing pressure to lower borrowing costs. [A Slump for Singapore ETFs]