Wednesday, May 8, 2019

MAS to disclose more information on monetary policy operations

TODAY file photo

08 May, 2019

SINGAPORE — The Monetary Authority of Singapore (MAS) will start releasing more information on its exchange rate-based monetary policy operations this year, as it announced a transfer of S$45 billion from official foreign reserves to the Government.

In a media release on Wednesday (May 8), the central bank said it had decided to release data on its foreign exchange intervention operations on a six-month basis, beginning with data for the second half of 2019.

The data will comprise MAS’s net purchases of foreign exchange on a six-month aggregated basis, and with a six-month lag from the end of the period.

"This further disclosure initiative will provide market participants a better indication of the actions that MAS has undertaken to implement its monetary policy stance, while preserving MAS’s operational effectiveness," said MAS.

The central bank also announced that it would be transferring S$45 billion from the official foreign reserves to the Government for longer-term investment.

This is because the current level of official foreign reserves is "in excess" over what the central bank said it deems necessary to maintain confidence in Singapore’s exchange rate-centred monetary policy.
The stock of Singapore's official foreign reserves has grown steadily over the years, standing at S$404 billion as at April this year, said MAS.

As a proportion of GDP, official foreign reserves amounted to 82 per cent as at the first quarter of 2019.

"In its latest review, MAS assessed that it should maintain OFR (official foreign reserves) amounting to at least 65 per cent of GDP on an ongoing basis," said MAS.

"This level of OFR will provide a sufficiently strong buffer against stresses in the global economy and markets, and underpin confidence in Singapore’s exchange rate-centred monetary policy. Accordingly, the current level of OFR is in excess of that required by MAS."

The S$45 billion amount, which will be transferred in May this year, will be managed by sovereign wealth fund GIC to be invested on a longer-term basis with expected higher returns, said the central bank.

MAS's announcements come after the central bank last month kept its exchange rate-based monetary policy unchanged after tightening twice last year, in line with market expectations. 


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