5-7-2023 (SINGAPORE) The Monetary Authority of Singapore (MAS) has recorded its largest net loss of S$30.8 billion (US$22.8 billion) for the financial year ending Mar 31, compared to a loss of S$7.4 billion in the previous year. The central bank attributes the loss to negative currency translation effects resulting from a rising Singapore dollar and higher interest expenses incurred in mopping up excess liquidity in the banking system.
MAS managing director Ravi Menon said that the Sing dollar saw a “broad appreciation” against currencies such as the US dollar and the euro, where the official foreign reserves were held in, as the central bank tightened monetary policy three times during the financial year to control inflation. This led to “significant negative currency translation effects” as MAS’ financial results are reported in the Sing dollar, he added.
MAS said it made a “small” investment gain of S$0.6 billion on the country’s official foreign reserves amid the challenging market environment where both bond and equity markets performed poorly. However, this was offset by the appreciation in the Sing dollar and higher interest expenses on domestic money market operations.
The central bank’s total expenditure ballooned to S$13.7 billion from S$2.8 billion, mainly due to higher interest expenses on MAS bills and other borrowings for domestic money market operations.
As a result of the loss, MAS will not contribute to the government’s consolidated fund nor return profits to the government for the financial year. To ensure that the central bank remains well-capitalized relative to its assets, MAS said it increased its issued and paid-up capital by S$25 billion to S$50 billion in the financial year.
As of Mar 31, the total capital and reserves of MAS were at S$34.3 billion.
