Singapore’s dollar rose for a second day on speculation traders reversed bets that the currency would depreciate after the central bank signaled there was no change to its policy bias even as the economy shrank. Singapore’s dollar was the biggest gainer today among Asia’s 10 most-active currencies before Prime Minister Lee Hsien Loong unveils his budget, which analysts say may contain the biggest- ever stimulus package to combat the recession. The central bank said yesterday that the stance of zero currency appreciation was unchanged and there was no plan to bring forward an April review. “What we are seeing in the Singapore dollar is some taking back of expectations of any policy change, at least not until April,” said Magnus Prim, chief Asia strategist at Skandinaviska Enskilda Banken in Singapore. “Traders had bet for a policy move before April after the gross domestic product numbers were far worse than expected.” Singapore’s dollar rose as much as 0.8 percent to S$1.4923 to the U.S. currency before trading at S$1.4958 as of 11:24 a.m. local time, according to data compiled by Bloomberg. It fell to S$1.5120 yesterday, the weakest level since Dec. 8. The government yesterday forecast the economy will contract by as much as 5 percent this year, after expanding 1.2 percent in 2008. There’s no reason for a persistent weakening in the Singapore dollar, Monetary Authority of Singapore Deputy Managing Director Ong Chong Tee said yesterday. Policy Change Singapore’s dollar will resume its decline in coming months as the authorities adopt a weak currency stance in April, Prim said, forecasting the currency will decline to S$1.55 after the policy review. “It’s hard to see the monetary policy stance staying unchanged as the global economic situation has deteriorated so much since the last review in October,” he said. “I would be disappointed if they did not deliver.” Singapore’s central bank manages its monetary policy by guiding the currency within an undisclosed band based on a weighted basket of major trading partners’ currencies. Policy adjustments are made by changing the slope, width and center of the band. The authorities stopped seeking currency gains at the October review after the country fell into a recession in the third quarter, replacing it with a zero appreciation stance. The currency will fall to S$1.55 against the U.S. dollar by the end of June, according to the median estimate in a Bloomberg survey of 22 banks and brokerages.

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