Singapore's Central Bank Posts Record Annual Net Loss

By Ronnie Harui

Singapore's central bank posted a record annual loss due to the currency-translation effects of a stronger Singapore dollar and high interest expenses from mopping up excess liquidity in the banking system.

Net loss widened to 30.8 billion Singapore dollars (US$22.82 billion) for the year ended March from S$7.4 billion in the previous fiscal year, the Monetary Authority of Singapore said in its annual report Wednesday.

About 70% of the net loss stemmed from the negative currency-translation effects of a stronger Singapore dollar, while the remaining 30% was due to net interest expenses from the central bank's money-market operations to drain excess liquidity from the banking system, MAS Managing Director Ravi Menon said at a press conference.

"The Singapore dollar appreciated significantly during FY22/23 as MAS tightened monetary policy to dampen inflationary pressures," Menon said. "Negative currency translation effects are not cause for concern. It does not make sense to try to avoid such negative currency translation effects."

Money-market operations are part and parcel of the MAS's monetary-policy function, and there are various instruments the central bank uses to withdraw liquidity, but they all incur an interest cost, he said.

"The S$30.8 billion net loss is not cause for concern, though the investment performance bears close watching," Menon said.

Write to Ronnie Harui at [e-mail]

(END) Dow Jones Newswires

07-05-23 0026ET