Supported by robust gains in trade and tourism, Signapore's
economy, along with its related exchange traded fund (
), grew at a phenomenal rate in the first quarter, prompting the
government to revise upward this year's growth forecasts.
Singapore's economy expanded 32.1%, its quickest pace in about
35 years, during the first three months of 2010,
reports Alex Kennedy for BusinessWeek
. The government revised its 2010 forecast to between 7% and 9%
from between 4.5% and 6.5%. [
Singapore ETFs: Slinging Up to Its Full
Industrial production surged 139% from the previous quarter, led
by the electronics and biomedical sectors while services grew 11%.
The economy relies on trade, finance and tourism.
The Central Bank has shifted its exchange rate target from a 0%
appreciation of the Singapore dollar to a more "modest and gradual"
appreciation in an attempt to obviate inflation. The government
expects inflation to be between 2.5% and 3.5%.
After the Central Bank decided to shift its exchange rate
target, Singapore's currency shot up to a 20-month high,
The New York Times
. Economists estimate that the currency had been revalued 1.2% to
1.4%, and some predict that the currency could reach 1.36 to the
U.S. dollar with months, or even approach a record of about 1.345.
The Singapore dollar hit 1.3784 against the U.S. dollar recently
and has gained 1.9% so far this year.
Singapore's Central Bank sets its policy only twice a year, and
it would have risked being behind if it hadn't tightened its
monetary policy now. The Central Bank manages the Singapore dollar
in a secret trade-weighted band against a basket of currencies
rather than setting interest rates.
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Max Chen contributed to this article.