EM ASIA FX-Singapore dollar slips after headline CPI turns negative

(Recasts with Singapore dollar reaction to CPI. For earlier

report, double click on )

SINGAPORE, Dec 23 (Reuters) - Most Asian currencies fell on

Tuesday, with the Singapore dollar extending its losses after

the city-state reported a year-on-year drop in headline

inflation for the first time in nearly five years in November.

Singapore's all-items consumer price index (CPI) fell 0.3

percent in November from a year earlier, the first annual

decline since December 2009.

Economists said the CPI data by itself is unlikely to prompt

the Monetary Authority of Singapore (MAS) to ease monetary

policy at its next policy review in April, given that the

year-on-year fall in CPI was not caused by any sharp drop-off in

demand.

Still, traders said it was enough to dent the Singapore

dollar, which added to its earlier losses and touched a low of

1.3239 versus the U.S. dollar at one point. That

brought it close to an early December trough of 1.3245, the

Singapore dollar's lowest level since November 2010.

In Singapore, headline inflation has declined this year due

to falls in rent following property-cooling measures in recent

years, as well as a drop in the prices of car permits. Both

elements can be heavily impacted by government policies.

The data is not "alarming enough" for the MAS to be forced

into any knee-jerk type of policy reaction, said Vishnu

Varathan, senior economist for Mizuho Bank in Singapore.

However, Varathan added that the chances of the MAS easing

policy in 2015 are increasing. He said his expectation is for an

easing in October - at the second of two semi-annual policy

reviews - by reducing the upward slope of the Singapore

dollar's policy band.

With Singapore's growth likely to remain modest next year

and as weak oil prices bring disinflationary pressures, there is

a minority view among economists that the MAS will ease monetary

policy in April.

At its last policy review in October, the MAS stuck to its

tight monetary policy stance of allowing a "modest and gradual"

appreciation of the Singapore dollar and kept the slope, width

and mid-point of the Singapore dollar's policy band unchanged.

The relative firmness of core inflation, which excludes

changes in car-related and accommodation costs and is the focus

of monetary policy, is one reason why many economists have been

sceptical the MAS would ease policy very soon.

In November, core inflation slipped to a 19-month low of 1.5

percent year-on-year but is still averaging close to 2.0 percent

for the whole of 2014, in line with the central bank's 2-2.5

percent forecast for this year.

CURRENCIES VS U.S. DOLLAR

Change on the day at 0853 GMT

Currency Latest bid Previous day Pct Move

Japan yen 120.13 120.05 -0.07

Sing dlr 1.3230 1.3185 -0.34

Taiwan dlr 31.745 31.586 -0.50

Korean won 1101.20 1096.20 -0.45

Baht 32.89 32.88 -0.02

Peso 44.69 44.62 -0.16

Rupiah 12450.00 12438.00 -0.10

Rupee 63.41 63.26 -0.24

Ringgit 3.4950 3.4870 -0.23

Yuan 6.2260 6.2216 -0.07

Change so far in 2014

Currency Latest bid End prev year Pct Move

Japan yen 120.13 105.28 -12.37

Sing dlr 1.3230 1.2632 -4.52

Taiwan dlr 31.745 29.950 -5.65

Korean won 1101.20 1055.40 -4.16

Baht 32.89 32.86 -0.08

Peso 44.69 44.40 -0.66

Rupiah 12450.00 12160.00 -2.33

Rupee 63.41 61.80 -2.54

Ringgit 3.4950 3.2755 -6.28

Yuan 6.2260 6.0539 -2.76

(Reporting by Masayuki Kitano; Editing by Richard Borsuk)