THE Monetary Authority of Singapore (MAS) surprised markets on Thursday by allowing the rising Singapore dollar to strengthen further, bucking a worldwide trend of countries resisting currency gains.

Citing concerns over inflation, the central bank set the Singdollar on a steeper appreciating path. It also gave the currency more room to fluctuate, in view of the unusual volatility in international currency markets.

The move runs counter to that of other central banks - which have been trying to boost competitiveness by capping the rises in their own currencies - and caused a flurry of activity in global markets.

The Singdollar soared as high as $1.289 against the greenback before settling down at about $1.294, a new record. With the Singdollar higher, other currencies had more room to rise as well.

The Australian dollar jumped to a 28-year high against the United States dollar, drawing almost level with it, while the Japanese yen hit a new 15-year peak.

The euro also climbed, by almost 1 per cent, to its highest level since January. Meanwhile, gold reached another record as investors mounted a fresh wave of exits from the US dollar.

MAS acts to curb inflation