This is reported in an
article by Simon Black, an international investor,
entrepreneur, permanent traveler, free man, and founder of Sovereign Man
posted in http://www.sovereignman.com/trends/singapores-central-bank-lost-87-of-gd. MAS lost S$10.2b trying
desperately to defend the Singapore dollar’s rise against the US dollar.
The report said that ‘MAS
was buying US dollars and then intentionally selling them at a lower price in
order to create artificial demand for US dollars. This
was a completely failed strategy.
Singapore’s ultra-healthy
economy attracts investment from around the world, and the natural tendency is
for the Singapore dollar to rise….
In fact, Singapore’s economy
only grew by S$11.5 billion from 2012-2013… so MAS managed to blow through 87%
of the country’s economic growth last year fighting Ben Bernanke. Crazy.
This is something that is
clearly not sustainable. And while that term is a bit overused today, such
losses cannot continue indefinitely.’
The sum is huge definitely
and the report suggested that this is a dangerous exercise that could bankrupt
a central bank. What it did not say but meant is that the MAS was stupid to do
what it did. Is that so? I believe that MAS must have strong reasons to do
spend $10.2b and has been quite successful in preventing the S$ to rise against
the greenback. In fact the S$ is looking like one of the weakest Asian currency
vis a vis the greenback and has lost some 10 to 20% in value. And I believe
this must be the goal of MAS and there must be better returns somewhere that
could offset the S$10.2b lost in allowing the S$ to weaken.
The author of the article
did not know the full story and thought that MAS is really making a big loss of
S$10.2b without knowing that the bigger picture could be net gains of much more
than this loss. I hope MAS could come out with an explanation to prove that the
author of the article is wrong and MAS is having the last laugh. Better to show
with statistics that the $10.2b spent has been recouped with several tens of
billions of profit.
As both gic and temasek have invested heavily overseas, the translation loss of overseas assets back to S$ would even be larger than the 10 billion. Tio Bo?
ReplyDeleteWell, is the President informed or "sleeping."
ReplyDeleteThis is in parallel that the government is also saying that the rise of the greenbacks against the SGP$ is a good thing, it help to stem inflation? So which is a truth and lie?
ReplyDeleteMAS can sell SGD to prevent rise of USD. This is how to do it.
ReplyDeleteSell SGD, buy gold. Our gold reserve increase and SGD remain on par with USD. Isn't that nice? Even if it is not palatable to buy gold, MAS can buy a basket of metals like copper, molybdenum, tungsten, silver, palladium, platinum, lithium, Indium, Dysprosium. These are fungible real commodities that need no large storage space. The value extremely dense value per unit volume. We preserve our savings by hoarding hard and scare commodities.
But be assured PAP will not do the right thing.
I think so far all our serve are invested in paper financial instruments that owned the physical assets but not the physical assets directly
ReplyDeleteThis is a stupid article by someone by someone who doesn't understand anything about central bank reserves.
ReplyDeleteMAS did not lose $10bn preventing the rise of the SGD.
MAS' reserves are in foreign currencies and their accounts are in Sing dollars.
Their foreign holdings are converted into SGD in their balance sheet at current rates and the shortfall is due to movements in exchange rates.
If MAS publishes a balance sheet in USD there will not be any loss.
S$10.2 billion spent?
ReplyDeleteNo worry lah.
MAS can recoup that in 10 months from the sale of car COEs.
"I hope MAS could come out with an explanation to prove that the author of the article is wrong and MAS is having the last laugh."
ReplyDeleteRB
Why should MAS do so?
Did PAP come out with an explanation that it is not worried because WP is the strongest opposition?
Please lah, RB.
If PAP is voted out, then maybe MAS will come out with an explanation.
ReplyDeleteMaybe a lot of ministers will also come out with explanations. LOL
Re-privatize the "Mana Ada Sistem" poorly-managed loss-making airline, or give it Tajudin Ramli for a song again.
ReplyDeleteWhat? We are not talking about the other MAS?
Come on, losses and gains are the Norms and part and parcel of investments
ReplyDeleteExplain?
Explain what and to who???
heard over the bbc: new governor of india's central bank mulling over buying gold from india's temples. the richest temple alone has gold, etc worth $20bil.
ReplyDeleteStandard garment reply: this post is mischievious and misleading. No evidence will be given tio bo?
ReplyDeleteMAS is selling S$ and buy into USD. It seems a clever move to buy into ascending currency with the improving US economy and increasing interest rate. I do not see any thing wrong with it.
ReplyDeleteAs for me I am selling S$ and buy Ringgits to go JB to buy petrol, car wash and medicine etc.
This is a stupid article by someone by someone who doesn't understand anything about central bank reserves.
ReplyDeleteMAS did not lose $10bn preventing the rise of the SGD.
MAS' reserves are in foreign currencies and their accounts are in Sing dollars.
Their foreign holdings are converted into SGD in their balance sheet at current rates and the shortfall is due to movements in exchange rates.
If MAS publishes a balance sheet in USD there will not be any loss.
MAS is selling S$ and buy into USD. It seems a clever move to buy into ascending currency with the improving US economy and increasing interest rate. I do not see any thing wrong with it.
As for me I am selling S$ and buy Ringgits to go JB to buy petrol, car wash and medicine etc.
You have fallen into the mind set of dollar hegemony. The USA will not stop printing $$$, and that is to say our USD reserve goes shit hole. The long term value of our USD reserve will be zero.
Also MAS need to print SGD to soak up extra USA. It creates lots of monies supply and cause inflation. Right now, the hot monies goes into property. PAP always say inflation problem they cannot control. They are telling lie. Just stop printing SGD let SGD appreciate our inflation will be curb. There are pros and cons to each approach though.
Sub sub sheu ler.
ReplyDeleteTwo things in life are certain; death and taxes.
'What is mine is mine, what is yours is mine.'
Just like GIC and TH, MAS also like to gamble on people reserves. This nation is too into gambling.
ReplyDeleteDon't blame MAS lah. Blame Bernanke -- he's the real culprit.
ReplyDeleteEven if USA print a lot money, still got demand mah.
ReplyDeleteEven if PAP govt no good, still can get re-elected mah.
Yes. The real experts in foreign currency management are in Redbean website
ReplyDelete