Impact on Singapore's Economy from US Treasury Adding Singapore to Watch-list of Currency Manipulators

Mr Pritam Singh asked the Prime Minister what is the impact on Singapore's economy arising from the US Treasury adding Singapore to a watch-list of currency manipulators.

The United States (US) Treasury produces a semiannual report on the macroeconomic policies of the major trading partners of the United States. In its report published in May, the US Treasury included Singapore in a Monitoring List of trading partners that it deemed merited closer attention on their currency practices and macroeconomic policies.

The US Treasury uses a generic set of criteria to determine the countries on its Monitoring List. The criteria include whether a country has a significant bilateral goods trade surplus with the US; a material overall current account surplus; or has in practice engaged in persistent one-sided interventions in the foreign exchange market. Singapore was assessed to have met the second and third criteria, and was therefore included in the Monitoring List.

Singapore's inclusion in the Monitoring List does not affect the Monetary Authority of Singapore's (MAS) conduct of monetary policy. The countries in the List are not by that virtue deemed to be currency manipulators. The US Treasury has also acknowledged the uniqueness of Singapore's exchange-rate based monetary policy system. Its report points out that MAS 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. And similar to other central banks that target the interest rate, MAS manages the exchange rate to ensure low inflation. MAS has made it clear that it does not use the exchange rate to make Singapore's exports more competitive.

MAS continues to be in constructive dialogue with the US Treasury to ensure that Singapore’s monetary policy framework including the role of foreign exchange intervention operations, are well-understood. MAS will continue to manage the S$NEER as appropriate, with the objective of ensuring medium-term price stability.