Monetary Authority of Singapore (MAS) posted a record net loss of $10.9 billion for the year ended March 31, 2011

I am naturally curious to read on for the cause of the massive loss and that being the 2nd loss in the last 40 years. Here are the info that I reaped STRICTLY from the articles from Business Times and Straits Times on Friday last.

Numbers as published:-

  • Total loss – $10.9 billions
  • Investment gains before adjusting for exchange rate revaluation – $12.3 billions.
  • SGD up against USD by 10% for year ended March 31, 2011.
  • SGD up against Euro by 5%.
  • Given the stronger SGD, domestic oil prices up by only 10% as compared to 20% on a global basis.
  • MAS manages $299.8 billions in assets as at year ended March 31, 2011 with foreign financial assets representing $287.7 billions ie. 96%!!!!

Here are the various key points discussed:-

  1. Headline in BT attributed the massive loss to strong SGD(Edgar – Thus exchange rate is said to be responsible for $23.2 billions reversal upon valuation of various balance sheet items.)
  2. ‘With recovery in asset markets over the past two years, MAS’ portfolio, excluding exchange rate effects, has more than recovered from effects of the global financial crisis,’ Mr Menon said. The loss is hence the result of ‘a reporting convention’ as per Mr Menon. If MAS reported its financial results in foreign currencies such as the US dollar or SDRs, as some central banks do, it would reflect a ‘healthy profit’, he noted. (Edgar – I presume he is trying to assure us that the loss is mainly due to a valuation exercise as there is no actual cashflow involved. Are you also telling us that if our reference currency is based on any other weaker currency other than SGD, we would be happy with our performance?) 
  3. But is it not a fact that Singapore’s purchasing power has declined by $10.9 billions? Mr Menon said no as the INTERNATIONAL purchasing power of our reserves is unaffected by the strength of Singapore dollars. I guess he is trying to say the $287 billions worth of foreign currencies would still buy Singapore the same amount of goods and services.
  4. So what have the stronger SGD and $10.9 billions loss bought for Singapore? MAS has essentially shielded the domestic economy from even higher inflationary pressures as the stronger SGD effectively halved the impact of higher oil and food prices.

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