MAS rejects reports of depleting reserves, denies aggressive intervention to keep SGD afloat

The decline was caused by currency translation effects.

The Monetary Authority of Singapore today denied reports that it has been intervening heavily to support Singapore’s currency.

The central bank slammed “erroneous” reports which have cited the fall in Singapore’s official foreign reserves (OFR) and MAS’ FX swaps since mid-2014 as an indication of heavy intervention by MAS to support the Singapore Dollar Nominal Effective Exchange Rate (S$NEER).

Singapore's official foreign reserves have dwindled by roughly US$ 29 billion from a high of around US$278b in June 2014 to US$249.4 in March 2015. This came after an increase of US$ 105 billion over the preceding five years.

The MAS clarified that the decline in the US Dollar (USD) value of the OFR in the last nine months till 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 has relied more on MAS bills in its money market operations, and most of the proceeds from the maturing swaps were transferred to the Government for management by GIC over a longer investment horizon. This is hence a transfer of assets, not a reduction in Singapore’s overall reserves,” the MAS stated.