S'pore to let market set dollar

S'pore to let market set dollar

SINGAPORE (Reuters): Singapore will allow the value of its currency to be determined by market forces and not push it one way or another, Finance Minister Richard Hu said.

Although the Monetary Authority of Singapore steps into the market occasionally, it was only to avoid large fluctuations, which might make it difficult for businessmen to operate, the Straits Times newspaper on Saturday quoted Hu as saying.

Hu made the remarks on the sidelines of a grassroots event on Friday.

Senior Minister Lee Kuan Yew said in Boston the currency would be allowed to weaken in line with other Asian currencies to maintain Singapore's economic competitiveness, the Business Times newspaper said on Saturday.

Lee was in Boston to speak at the 1997 Fortune 500 Forum on Friday.

Lee said that Singapore wanted its dollar to be at a competitive level.

But he but did not expand on how much the Singapore dollar was expected to fall.

Southeast Asia had been plagued by currency woes in the past few months and the Singapore dollar - once seen as a safe haven in times of regional turmoil - has not escaped unscathed.

On Thursday, the Singapore dollar plunged to a 46-month low of 1.5950 against the U.S. dollar.

Hu said that the Singapore dollar was dragged down not because of specific problems with its economy, but investor worries about the region as a whole.

Thailand, the Philippines and Indonesia have all effectively devalued their currencies in recent months amid mounting concerns over the health of their economies.

Hong Kong, which has the last currency pegged to the U.S. dollar in the region, became the latest target of speculators this week.

Banks pushed interest rates to astronomical levels to defend the local dollar, but the move sent Hong Kong stocks to their biggest point loss ever.