Singapore Dollar Declines as Government Cuts Growth Forecast

By David Yong and Lilian Karunungan

Feb. 14 (Bloomberg) -- The Singapore dollar fell to the lowest in more than a week after the government cut its economic growth forecast for this year.

Gross domestic product will probably expand between 4 percent and 6 percent, lower than an earlier estimate of 4.5 percent to 6.5 percent, the trade ministry said in a statement today. The economy grew 7.7 percent in 2007. The government trimmed its estimate because of concern that the U.S., Singapore's biggest export market, will enter a recession.

``The numbers reinforce the idea that Singapore is the most open economy in Asia and is exposed to the slowdown in the U.S., Europe and Japan,'' said Cem Karacadag, an economist at Credit Suisse in Singapore. ``The Monetary Authority of Singapore will continue to allow only a modest pace of appreciation in the currency until uncertainties over global growth risks diminish.''

The island's currency fell 0.1 percent to S$1.4184 against the U.S. dollar as of 9:38 a.m. in Singapore, according to data compiled by Bloomberg. It dropped to as low as S$1.4214.

The central bank in October said it would allow ``slightly'' faster appreciation in the island's dollar. The MAS uses the currency instead of interest rates to control monetary policy.

The monetary stance remains ``appropriate,'' the MAS said today.

Credit Suisse forecasts Singapore growth at 6 percent this year.