SINGAPORE, July 25 (Reuters) – Singapore’s central bank
boosted its paid-up capital by S$8 billion ($6.34 billion) and
withheld contributions to government coffers earlier this year
amid rising volatility in financial markets, its latest annual
report showed on Wednesday.
The Monetary Authority of Singapore (MAS) also revised its
2012 inflation forecast on Wednesday to 4 to 4.5 percent from
3.5 to 4.5 percent.
But it said core inflation — the figure it most closely
watches in setting monetary policy — was moderating, indicating
a possible loosening of its stance on the Singapore dollar
at its next half-yearly review in October.
The MAS said Singapore’s trade-dependent economy was on
track to grow by 1-3 percent this year but that the momentum was
“clearly slowing.” The city-state’s economy grew 4.9 percent in
2011.
“It (core inflation) is likely to ease further and approach
2 percent by the end of the year. This is not far from the
historical average of 1.7 percent,” MAS managing director Ravi
Menon said at a press conference about the annual report.
Core inflation excludes accommodation and private road
transport, which are determined more by government policy. On
Monday, the MAS said full-year headline inflation was expected
to be in the upper half of the official forecast.
The MAS had paid-up capital of S$25 billion as at March 31,
2012, up from S$17 billion at the end of the previous financial
year, according to its annual report.
The capital increase took effect on March 29.
The MAS did not hand over part of its profits to the
government during the financial year, resulting in a rise in its
net assets to S$35.15 billion from S$24.38 billion the year
before.
“This is a pre-emptive measure to strengthen the authority’s
capital and reserves in the light of a volatile financial market
environment,” the MAS said in the notes to its accounts.
Financial markets have been turbulent over the past year,
with sharp swings in currency values because of concerns over
the euro zone and uncertainty about the health of the U.S. and
Chinese economies.
The Singapore central bank made a net profit of S$2.77
billion in fiscal 2011/12, reversing from the record loss of
S$10.94 billion in the previous financial year when the strong
local dollar reduced the value of reserves held in other
currencies.
The MAS said its profits stemmed “mainly from interest
income and gains from asset disposals, offset partially by the
impact from the translation of the authority’s foreign assets
into the stronger Singapore dollar.”
Total assets managed by Singapore-based asset managers were
S$1.34 trillion as of the end of last year, 1.2 percent lower
than in 2010 due to market weakness, the MAS said.
The Singapore dollar rose 0.3 percent against the U.S.
dollar and 6.4 percent versus the euro in the 12 months to March
31 but weakened 0.4 percent against the yen.
($1 = 1.2611 Singapore dollars)
(Reporting by Kevin Lim; Editing by John O’Callaghan)
