SINGAPORE (Dow Jones)--The Singapore dollar was flat against the U.S. dollar late Thursday, after recovering from earlier declines as risk aversion sent Asian stock markets lower.
Thomas Harr, head of Asia FX strategy at Standard Chartered, said potential losses for the Singapore dollar are being kept in check by expectations the Monetary Authority of Singapore will stick to its policy of a gradual rise in the local dollar to keep inflation in check.
"Of course, we're moving closer towards the MAS meeting, where I think they'll maintain their appreciation stance, so there's a limit on how much the Singapore dollar will sell off. Topside (for U.S. dollar/Singapore dollar) is pretty protected at the moment," he said.
The MAS is expected to hold its semiannual policy meeting in April.
In early trade in Asia, the U.S. dollar broke above the S$1.2600 level for the first time since Tuesday, rising to a high for the day of S$1.2608. The U.S. currency's gains were short-lived, however, and by the afternoon it was fetching S$1.2565 compared with S$1.2567 late on Wednesday.
Harr said he expects to currency pair to remain in its recent range with downside for the dollar limited to the recent low at S$1.2530, and upside limited around S$1.2600.
Singapore government bonds were little changed on the day.
-By Matthew Allen, Dow Jones Newswires; +65 64154 158 ; matthew.allen@dowjones.com
