SINGAPORE - The Singapore dollar rose after the central bank said it would slow its rate of appreciation, with the easing by Monetary Authority of Singapore (MAS) seen as "milder than expected".

MAS announced in a statement at 8am on Wednesday (Oct 14) that it will flatten the slope of its currency band, to "slightly" reduce the rate at which the Singapore dollar is allowed to appreciate.

Right after the MAS move, the Singdollar jumped to nearly a one-month high of 1.3903 to the US dollar from Tuesday's close of 1.4011. It was trading at 1.3976 as of 9.27am.

Said Mr Bernard Aw, a strategist at IG Asia Pte: "What was surprising was that SGD actually appreciated following the MAS move. The USD/SGD dipped to nearly one-month low of 1.3908 before an intense struggle ensued, which saw the pair trading at around 1.4000. The sellers eventually prevailed, pushing the pair to mid-1.3900."

"There were talks that banks and leveraged names were cutting their long USD/SGD positions, as the MAS move was not as aggressive as originally believed."

He added that "the surprise upside" in the advance estimate of Singapore's third quarter also contributed to the Singdollar demand.

The economy avoided a technical recession in the third quarter, expanding 0.1 per cent from the previous three months, when it shrank a revised 2.5 per cent, advance estimates out also on Wednesday showed.

MAS called its decision to "slightly" slow the Singdollar's appreciation a "measured adjustment" to expectations now that growth will be "slightly" weaker than earlier envisaged.

Some economists had expected MAS to move the centre of its trading band lower - in effect devaluing the Singdollar immediately. Re-centering the band lower by half a band would be equivalent to a one-off devaluation of the Singdollar by 2 per cent, DBS Group Holdings senior currency economist Philip Wee estimated in a note on Oct 6.