About 5-year fall of Singapore's dollar -

Singapore's dollar will slide about 3 per cent versus the greenback to the lowest since July 2010 after the city-state's central bank unexpectedly eased monetary policy.

The currency will slide to S$1.39 by year-end after the Monetary Authority of Singapore probably reduced the slope of its appreciation against a basket of currencies by a percentage point, according to the median estimates of 15 economists and strategists. The central bank, which uses the exchange rate as its main policy tool, changed its settings last week in an unscheduled announcement.

The local dollar was at S$1.3480 at 11 a.m. in Singapore. Royal Bank of Canada forecast it will tumble to S$1.48 by Dec 31, the most bearish projection, while Bank of Tokyo-Mitsubishi UFJ Ltd saw it little changed at S$1.35. The survey was carried out from Jan 30 to Feb 3.

The central bank has halved the slope of the policy band for the currency to 1 percent, according to the survey. The MAS said Jan 28 it will reduce the slope of the band, with no change to its width and the level at which it is centered. Singapore will keep a "modest and gradual appreciation" of the local dollar against a basket of currencies, the authority said.

The US dollar probably accounts for 21 per cent of the basket, the ringgit 13 per cent, the yuan 13 per cent, the euro 12 per cent and the yen 11 percent, according to the analysts' estimates.

Unanticipated central-bank actions in January helped boost JPMorgan Chase & Co's Global FX Volatility Index to a 19-month high of 11.68 on Jan 16, the day after the Swiss scrapped the franc's cap against the euro.