Singapore's current monetary policy of a modest and gradual appreciation of the Nominal Effective Exchange Rate of the Singapore dollar (S$NEER) remains appropriate, Managing Director of the Monetary Authority of Singapore (MAS) Heng Swee Keat said Thursday.

"Taking into account the growth and inflation prospects, MAS' assessment is that our current policy stance of a modest and gradual appreciation of the S$NEER, with no re-centering of the band, nor any change to its slope or width, remains appropriate," he told a press conference to release the central bank's 2005/06 annual report.

Heng noted that the factors that underpinned the growth of the Singapore economy in 2005 will continue to support the expansion this year.

He expected Singapore's gross domestic product (GDP) growth for 2006 to be in the range of 5 percent to 7 percent, as forecast by the government.

"However, the risks of a sharper slowdown due to (oil) supply side disruptions have now increased and clearly, geopolitical developments will have an important bearing on the evolution of oil prices, financial markets and the real economy going forward," he warned.

Singapore's monetary policy involves managing its national currency, which is traded against a basket of currencies of its major trading partners, while keeping the S$NEER policy band undisclosed to prevent speculation in the currency.

Singapore's GDP grew by 6.4 percent in 2005 over the previous year, and the Ministry of Trade and Industry estimated last week that the country's economy has expanded by 9 precent year-on-year in the first half of 2006.

Source: Xinhua