Illustrative photo. (Photo: tanwj.com) The trade-weighted Singapore dollar (SGD) has not been drastically affected by the devaluation of the Chinese yuan, according to the Monetary Authority of Singpore (MAS).
Although the SGD fell as low as 1.415 to USD on August 12 – the lowest level for the currency since 2010, the MAS affirmed that the SGD exchange rate is under control.
SGD is managed against a trade-weighted basket of currencies within a policy band, which is not dependent on specific bilateral exchange rates. This mechanism allows SGD to adjust to short-term markets while staving off undue volatility in the foreign exchange market.
The MAS said that Singapore’s monetary market policy announced in April 2015 remains appropriate in relation to overall macroeconomic conditions.
Economic analysts recommend Singapore keep a close watch on yuan adjustments as continuous yuan devaluation will negatively impact regional currencies under pressure from the strong USD.
They also warned that weakened monetary markets and sluggish economic growth will result in capital flows fleeing to the US and the EU, where economic potentials are brighter.-VNA
