NO CHANGE IN SINGAPORE'S MONETARY POLICY, SAYS MAS

By Tengku Noor Shamsiah Tengku Abdullah
SINGAPORE, Aug 18 (Bernama) -- Singapore's interest rates are
market-determined and that the current monetary policy stance, announced in
April 2011, remained appropriate, said a spokesman for the Monetary Authority of
Singapore (MAS).

In a statement Thursday, the spokesman said the monetary policy framework
was based on managing the trade-weighted exchange rate.

"This means that, given the economy’s openness to capital flows, domestic
interest rates are strongly influenced by global liquidity conditions," he said.

The statement was made in response to media queries on recent market
movements in the Singapore dollar swap offer rate (SOR).

The spokesman said the Singapore dollar interest rates had been low for some
time due to historically low global interest rates.

"The major economies are keeping monetary policy loose for a sustained
period in the face of a weak recovery from the 2008-09 recession," he said.

According to the spokesperson, recent volatility in global financial markets
has caused some investors to seek the safety of short-term cash deposits.

"This has been most evident in the forward markets. SOR is a derived rate
for borrowing Singapore dollar in the forward market through a foreign exchange
swap transaction.

"It has turned negative, reflecting market expectations of the exchange
rate," he said.

He said Singapore’s domestic money markets continued to function in an
orderly manner and MAS has had no need to undertake any extraordinary measures.