Singapore does not engage in currency manipulation, says MAS in response to US report

The Monetary Authority of Singapore said that the Republic’s monetary policy framework, which is centred on the exchange rate, has always been aimed at ensuring medium-term price stability, ‘and will continue to do so’. — AFP pic
The Monetary Authority of Singapore said that the Republic’s monetary policy framework, which is centred on the exchange rate, has always been aimed at ensuring medium-term price stability, ‘and will continue to do so’. — AFP pic

SINGAPORE, May 29 — The Monetary Authority of Singapore (MAS) today said that it does not manipulate the Singapore dollar for export advantage, or to achieve a current account surplus.

The central bank’s statement was made in response to media queries on a US Treasury report released earlier today.

Singapore was among nine countries which had been highlighted for their currency practices in the twice-yearly report to the US Congress. Other countries in the watchlist include China, Germany, Ireland, Italy, Japan, South Korea, Malaysia and Vietnam.

In its statement, MAS said that the Republic’s monetary policy framework, which is centred on the exchange rate, has always been aimed at ensuring medium-term price stability, “and will continue to do so”.

It added that a “deliberate weakening of the Singapore dollar would cause inflation to spike and compromise MAS’ price stability objective”.

MAS added that it manages the Singapore dollar nominal effective exchange rate (S$NEER) within a policy band, just as other central banks conduct monetary policy by targeting interest rates.

“Whether they target the exchange rate or the interest rate, central banks aim to keep consumer price inflation low and stable as their primary mandate,” said MAS.

Current account surplus will fall as Singapore ages

MAS also said that Singapore’s current account balance “should be viewed in context”, adding that in its early years of development, the Republic ran a “persistently large current account deficits averaging close to 10 per cent of GDP between 1965 and 1984”.

“As the economy matured, its investment needs tapered off, while national saving rose. Consequently, the current account turned into a surplus position,” said MAS.

But it added that, together with rising affluence that will raise consumption, Singapore’s current account surplus will be reduced when public and private savings are drawn down for the needs of an ageing population. — TODAY

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