In a statement today, MAS said these reports had incorrectly cited the fall in Singapore’s official foreign reserves (OFR) and MAS’ forex (FX) swaps since mid-2014 as an indication of heavy intervention by MAS to support the Singapore Dollar Nominal Effective Exchange Rate (S$NEER). “The decline in the US Dollar value of the OFR in the last nine months until end-March 2015 was due to currency translation effects arising from the broad-based appreciation of the USD against the other major currencies in the OFR.     “The stock of FX swaps declined as MAS relied more on MAS bills in its money market operations and most proceeds from the maturing swaps were transferred to the government for management by GIC (Singapore’s sovereign wealth fund) over a longer investment horizon,” MAS said, adding this was a transfer of assets, not a reduction in Singapore’s overall reserves.     The central bank said Singapore’s OFR declined by US$29 billion from June 2014 to US$249 billion as at end-March 2015. “This came after an increase of US$105 billion over the preceding five years,” it said. MAS said it invests the OFR in a portfolio that is well-diversified by assets and currencies.  About three-quarters of the OFR are denominated in the major G4 currencies, i.e. USD, Euro, British Pound and Japanese Yen with no single currency allocation making up more than one-third of the composition.     “The FX swaps are one of the money market instruments that MAS uses to manage liquidity in the banking system. “A substantial amount of FX swaps was accumulated by MAS during 2009-2011 when there were strong capital inflows to Singapore amid exceptional monetary easing in the major advanced economies,” it said adding from June 2014 to March 2015, the stock of FX swaps fell by US$ 24 billion to US$34 billion.  MAS said it has allowed its FX swaps to mature as it increased its reliance on MAS bills as a money market instrument.       “Most of the proceeds from the maturing FX swaps were in excess of what MAS needed in the OFR to maintain confidence in the Singapore Dollar and hence were transferred to the government for management by GIC over a longer investment horizon,” it added. — Bernama