Singapore - Singapore's central bank on Tuesday eased monetary policy for the second time since 2003 by effectively devaluing the currency as the government forecast a record economic contraction this year, the Straits Times reported. The Monetary Authority of Singapore (MAS) re-centred the currency's secret policy band at the existing level of its trade-weighted index, a move economists estimate could imply a devaluation of anywhere between 1 and 3 per cent.

The move came as Singapore's economy contracted a record 11.5 per cent from a year earlier in the first quarter of 2009, more than a market median forecast of an 8.8-per-cent slump and deepening the trade-dependent city-state's worst-ever recession, said a report in the daily.

The government said Tuesday it expected the economy to shrink by between 6 and 9 per cent this year. The MAS sets policy by managing the Singapore dollar in a secret trade-weighted band against a basket of currencies, instead of setting interest rates.

Since the last monetary policy review last October, the MAS said the nominal effective exchange rate has largely fluctuated in the lower half of the policy band, due to a number of factors, including the general strength of the US dollar, continued risk aversion by global investors and the erosion in domestic economic conditions. (dpa)