Singapore: MAS posts record S$30.8 billion loss following Sing dollar tightening to bring down inflation

THE Monetary Authority of Singapore (MAS) on Wednesday (Jul 5) posted a net loss of S$30.8 billion for the financial year ended Mar 31, 2023, the largest loss it has ever recorded.

This was largely due to the effects of monetary policy tightening to bring down inflation.

“MAS is not switching from inflation-fighting mode to growth-supporting mode,” said Ravi Menon, managing director of MAS.

“We are closely monitoring the evolving growth inflation dynamics… and we stand ready to adjust monetary policy as needed, especially if inflation momentum were to really accelerate,” he added.

At present, MAS has assessed the prevailing monetary policy stance to be sufficiently tight and appropriate for securing medium-term price stability.

MAS’ loss for FY2022/23 was largely due to the strengthening of the Singapore dollar, offset by weak investment gains as both bond and equity markets performed poorly.

The stronger Singapore dollar led to a negative currency translation effect and higher interest expenses on domestic money market operations.

The currency translation effect amounted to S$21.4 billion in FY2022/23 on broad appreciation of the Singapore dollar against the US dollar, euro, yen and pound sterling. Meanwhile, MAS’ investment gains stood at S$600 million. 

The central bank incurred a total expenditure of S$13.7 billion in FY2022/23, largely due to interest expenses on MAS bills and other borrowings for domestic money market operations.

As Singapore dollar interest rates rose together with the increase in global interest rates, MAS incurred higher interest expense in its conduct of money market operations.

This is the second year MAS has recorded a net loss, following a net loss of S$7.4 billion recorded in FY2021/22.

This year, it similarly did not make a contribution to Singapore’s Consolidated Fund, nor return profits to the government.

MAS also raised its issued and paid-up capital by S$25 billion to S$50 billion, as a conservative measure to ensure it remained well-capitalised relative to its assets.

As at Mar 31, MAS’ total capital and reserves was $34.3 billion.