Singapore Dollar Falls Most in 2 Years on Concern Growth Slower

By Patricia Lui

Aug. 8 (Bloomberg) -- Singapore's dollar fell the most in two years on concern the economy is slowing, encouraging the central bank to allow the currency to weaken to support growth.

The local dollar headed for its biggest weekly loss since May 2004 after Finance Minister Tharman Shanmugaratnam said the economy is moving toward a slowdown and growth is unlikely to rebound ``anytime soon,'' according to a report in the Straits Times newspaper today. Prime Minister Lee Hsien Loong will deliver his annual eve of National Day speech today and may announce revised second-quarter and full-year growth forecasts.

``Tharman's dovish comments confirm expectations that the central bank won't be seeking any further policy tightening,'' said Emmanuel Ng, economist at Oversea-Chinese Banking Corp. in Singapore. ``Second-quarter GDP and the full-year growth numbers also run the risk of being revised downwards at Prime Minister Lee's speech later today.''

The local dollar weakened 1.1 percent to S$1.3987 against the U.S. currency, the biggest loss since May 15, 2006, according to data compiled by Bloomberg. It has declined 2 percent this week, heading for the biggest five-day slump since the period ended May 14, 2004.

To contact the reporter on this story: Patricia Lui in Singapore at plui4@bloomberg.net.