SINGAPORE - The Monetary Authority of Singapore (MAS) looks poised to announce an easing of policy settings in its semi-annual review next Tuesday to shore up an economy that is well into its deepest recession on record.

While reading the tea leaves of Singapore's unique currency-based monetary system is always tricky, most analysts surveyed by Reuters say it may shift the secret trade-weighted band for the Singapore dollar down at one go.

A few others expect the MAS to pick other options such as either widening the band or steering the centre of the band lower at a predetermined pace over time. Quite possibly, the regulator could opt for a combination of these three basic options.

MAS MOVES DOWN CENTRE OF THE TRADE-WEIGHTED BAND:

Eleven out of 14 economists said the central bank would re-centre the policy band, shifting it down in what would effectively be a one-off devaluation, to offset the policy tightening made in April 2008.

Analysts' estimates of the band show the currency is already at the weak end of the band.

Most of them expect the MAS to fix the mid-point of the new band around the current weak level of the nominal effective exchange rate (NEER) band, resulting in a devaluation of anywhere between 1 to 3 percent.

Some such as HSBC even suspect the central bank may weaken the mid-point beyond the bounds of the current band.

'Assuming recent Singapore dollar NEER ranges continue to hold in the coming week, this translates into approximately a 1 percent shift in the policy band - considerably less aggressive compared to policy shifts of 2 percent to 3 percent in the past,' ANZ investment bank said in a note to clients on Wednesday.

'The incremental move could mark the end of the easing cycle, but a clear signal to such effect would seem to be premature at this juncture.'

Investment houses or researchers that predict the MAS will re-centre the band include BNP Paribas, Deutsche Bank, HSBC, JPMorgan Chase, Societe Generale, Standard Chartered Bank, ANZ, Citigroup, OCBC Bank, Barclays Capital and 4CAST.

MAS WIDENS TRADE-WEIGHTED BAND:

Citigroup's Kit Wei Zheng, who gives a 60 percent chance of a band re-centring, projected a 25 percent chance of a widened trading band, which he said was normally done to 'accommodate volatility rather than because of economic fundamentals.'

Analysts at OCBC Bank, whose base scenario is also for a re-centring of the band, believe there is a lower probability of the MAS combining a band re-centring with widening of the band, a scenario that analysts at 4CAST are also expecting.

'The principle behind MAS' expected policy action is one grounded in effective and significant downshift in gear before poising for shifting back up,' Vishnu Varathan of 4CAST said in a client note.

MAS PUTS THE BAND ON A GRADUAL DEPRECIATION PATH:

Westpac Bank and the Royal Bank of Scotland predict that the MAS will move from a neutral policy, one which keeps the mid-point of the trade-weighted band on a zero appreciation path, to one where it will guide the band lower at an undisclosed downward pace.

'We believe the central bank needs to give the Singapore dollar a push lower through a clear statement, whether a discrete band shift lower, adoption of downward slope or both,' Westpac analyst Sean Callow said in a client note.

MAS RETAINS NEUTRAL POLICY STANCE, MAKES NO CHANGE TO BAND:

Credit Suisse forecasts the Singapore central bank will stick to its current policy for now, a scenario that others such as the Royal Bank of Scotland also reckon is likely.

Credit Suisse economist Joseph Tan said the central bank's concern now was to ensure sufficient lending by the banking system. 'So that is going to be the crux of the focus as opposed to trying to engineer weakness at a time when the Singapore dollar is already the weakest currency in Asia as of today'.