Exchange Rate Policy at the Monetary Authority of Singapore

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I, Andrew Khanano, of sound mind, declare that the work submitted is of my own work, and all resource and information used has been appropriately cited.

Singapore is located at the centre of a crucial sea route in the far east. The sea route is controlled by the Japanese and attempting to prevent from the British claiming the control of the route.

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On February 17, 2018 at approximately 1854 hours, I was dispatched to the Family Dollar located at 6670 Ridge RD Port Richey, FL in reference to a subject attempting to utter a counterfeit $20 bill. Upon my arrival, I made contact with Family Dollar employee, Katlyn Sue Edwards.

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Firstly, Singapore was able to enjoy consistent budget surpluses over the years which contributed to a high saving rate, which in turn produced one of the highest investment rates in the world for Singapore. Secondly, high amount of domestic savings has also provided Singapore with high level of foreign reserves, which refers to holdings of foreign currency such as the dollar or the Euro, which helped to boost investors confidence and also helps dampen inflation if any.

There were two major happenings that temporarily effected Singapore’s economy between 2001 and 2003—the worldwide electronics slump and the outbreak of Severe Acute Respiratory Syndrome (SARS). Both times, growth bounced back, by world demand for electronics, pharmaceuticals, other manufactured goods, and financial services. The return was mostly contributed to by the economies of its major trading partners—the United States, the European Union, Japan, and China, as well as expanding emerging markets such as India (Bureau of East Asian and Pacific Affairs, 2010). The next

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Finally given the slowing economy in Asia the International Monetary Fund (IMF) has reclassified the yuan. Previously the IMF considered it to be “substantially undervalued” compared to other currencies. The IMF has softened its tone toward the Chinese yuan and it is now considered “moderately undervalued”. This new designation makes it harder for the United States government to make a case against and therefore policies to target the imports based on the Chinese yuan. (Davis, 2012)

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First, the fixed nominal exchange rate has lost its real economic significance, the current RMB exchange rate formation mechanism is difficult to form market-clearing equilibrium rate. Practice, exchange settlement and capital management system in suppressing demand for foreign exchange at the same time creating a large part of foreign exchange supply, the central bank continued to intervene and the fact that the position of the largest market makers, erase all the differences between actual supply and demand. The central bank 's benchmark rate to determine the true market supply and demand balance is not the result can not reflect the market changes.

The Republic of Singapore celebrated its 42 years of independence in year 2007. Situated at the southern tip of Malaysia, Singapore currently holds a population of 4.68 million as of June 2007. At 704.0km2, it is ranked 4th in the world for its population density. During the past four decades, the economy as measured by real Gross Domestic Product (GDP), multiplied by over 20 times (Ghesquiere, 2007, p.11). As a small and extremely open economy, Singapore long term survival is very much dependent on the ability to maintain its viable position and remain afloat in the sea of global competition (Mun Heng et al, 1998, p.14).

And as discussed above, their major clients are people who came from different country and which mean that SIA is also receiving foreign currencies from their customers. This shows that sometimes they might experience surplus and also deficit in this area based on the fluctuations in SGD. Foreign currency transactions are converted into SGD at exchange rates, which follow bank rates prevailing at dates of transactions. This year they lose $15.3 million because of the effect of the exchange rate changes.