MAS posts $7.4b annual loss, weighed by stronger Singdollar amid soaring inflation

[DOBIEMKZ]

MAS posts $7.4b annual loss, weighed by stronger Singdollar amid soaring inflation

MAS announced that it clocked a net loss of $7.4 billion for the financial year ended March 31, 2022. PHOTO: ST FILE

https://www.straitstimes.com/business/banking/mas-posts-74-billion-annual-loss-weighed-by-stronger-singdollar-amid-soaring-inflation?utm_campaign=stfb&utm_medium=social&utm_source=facebook&fbclid=IwAR0lyHXC460tEihJPmpe3gW-5tfSodwTFreAp8OpCLoS7pMAZ7mlMKx62Qs

Published 19 July 2022

SINGAPORE - Singapore's financial sector went from strength to strength, buoyed by broad-based growth but inflationary pressures, wobbly global growth and global tightening monetary policies have weighed on the central bank's fiscal performance.

The Monetary Authority of Singapore (MAS) on Tuesday (July 19) announced at its annual review that it clocked a net loss of $7.4 billion for the financial year ended March 31, 2022 - the first time in nine years.

The loss came from lower investment gains, a large negative foreign exchange translation effect, and higher interest expenses.

As a result of the loss, MAS did not contribute to Singapore's consolidated fund, out of which government expenditure is made, for the financial year. It had contributed $1.07 billion in fiscal 2021 and $2.17 billion in 2020.

MAS also said that as at end-March, Singapore's official foreign reserves recorded a net loss of $4.7 billion as investment gains of $4 billion were more than offset by the strengthening of the Singapore dollar, which led to a negative foreign exchange translation effect of $8.7 billion.

The Singdollar strengthened 4 per cent against the British pound, 5 per cent against the euro, and 9 per cent against the Japanese yen, MAS noted.

The investment returns from Singapore's reserves supplement its Budget spending. The Government can spend up to 50 per cent of the expected long-term investment returns generated by MAS, GIC and Temasek Holdings – the three entities tasked to manage the reserves.

MAS’ total expenditure for the year increased, to $2.8 billion, due mainly to higher interest expenses on domestic money market operations.

The central bank has been gradually tightening monetary policy since Oct 2021, as inflation continues to rise. A stronger exchange rate makes imports cheaper. It can also decrease Singapore’s exports, dampening economic growth. Both effects can also reduce the pressure to raise wages.

In July, MAS further tightened monetary policy in its second off-cycle move this year.

MAS managing director Ravi Menon said on Tuesday that core inflation is projected to increase to a peak of 4 per cent to 4.5 per cent in the third quarter this year before levelling off to 3.5 per cent to 4 per cent by year end, much higher than what Singapore is used to. Core inflation excludes housing rents and private transport costs.

"If there are fresh shocks to global energy and food supplies arising from the ongoing conflict in Ukraine or a significant overheating of the domestic labour market, inflation may end up being higher and more persistent," he said.

Senior Minister and MAS chairman Tharman Shanmugaratnam said in the report that the central bank had tightened monetary policy four times since Oct 2021 to help ensure medium-term price stability, amid sustained growth in the economy.

"These moves should slow the inflation momentum but cannot fully mitigate the pass-through of higher global inflation, especially in food and energy prices.

"The domestic labour market is tight and some pickup in consumer services inflation is to be expected. However, MAS expects core inflation to stabilise by the latter part of the year," he added.

Tighter financial conditions, coupled with a squeeze on real incomes as a result of rising prices, will drag on growth, Mr Menon said, adding that it is difficult to estimate the extent of the growth slowdown next year given the complex interplay of multiple factors.

In the second half of this year, slowing growth in the global economy will weigh on Singapore's trade-related sectors, even as the domestic-oriented and travel-related sectors continue to recover.

For 2022, Singapore's economy is expected to grow in the lower half of the 3 per cent to 5 per cent forecast range.

Amid the uncertain outlook, a silver lining was the expansion in banking, insurance, asset management and payment services that resulted in a 7.4 per cent value-added growth in the financial sector.

Fintech investments hit a high of US$3.9 billion (S$5.44 billion), while the past year recorded a net creation of 4,300 jobs in financial services.

MAS said the banking sector has maintained healthy asset quality alongside strong capital and liquidity buffers.

Industry stress test results also show that banks would have sufficient buffers to weather shocks from an adverse macroeconomic scenario.

Mr Menon said MAS has updated the financial services industry transformation map (ITM) for the period 2021-25 and will launch it in a couple of months. ITM lays the blueprint of strategies and initiatives to further strengthen Singapore's position as a regional financial hub.

Household balance sheets are also generally resilient and most should be able to service their loans even in the event of sharp interest rate hikes and income loss.

But Mr Menon warned that there will be "a small segment of households" that may be more constrained by rising interest rates.

The household leverage has remained elevated compared with pre-Covid-19, driven by the growth of new housing loans on the back of a buoyant property market since end-2019.

 

Edited July 19, 2022 by DOBIEMKZ

[Fitvip]

TIme to change the head.

[inlinesix]

1 minute ago, Fitvip said:

TIme to change the head.

"MAS also said that as at end-March, Singapore's official foreign reserves recorded a net loss of $4.7 billion as investment gains of $4 billion were more than offset by the strengthening of the Singapore dollar, which led to a negative foreign exchange translation effect of $8.7 billion."

Without this, our inflation will be even worse.

[Inlinefour]

no wonder my fish soup $6 increased to $7.20 

 

if not maybe inflate to $60 hor 

 

few months later gst up 

 

guess my fish soup will be $10 liao 

Edited July 19, 2022 by Inlinefour

[Wind30]

I always think we overspend on the covid fight. I think every cent of the gov money needs to be prudent. 

[inlinesix]

18 minutes ago, Inlinefour said:

no wonder my fish soup $6 increased to $7.20 

 

if not maybe inflate to $60 hor 

 

few months later gst up 

 

guess my fish soup will be $10 liao 

That sounds like Sri Lanka

🤭

[Didu]

56 minutes ago, Wind30 said:

I always think we overspend on the covid fight. I think every cent of the gov money needs to be prudent. 

I think 1st and 2nd gen leaders are prudent. Nowadays, Govt handouts seems to be a very popular measure. The segment of the population also getting used to receiving such handouts, and expects the Govt to do so whenever there is a market downturn.

[Arogab]

3 hours ago, Inlinefour said:

no wonder my fish soup $6 increased to $7.20 

 

if not maybe inflate to $60 hor 

 

few months later gst up 

 

guess my fish soup will be $10 liao 

Last month I eat fish soup was $9😭, I keep saying Thailand not cheaper than Singapore. Now I run back here and drink Tomyam soup

[Arogab]

2 hours ago, inlinesix said:

That sounds like Sri Lanka

🤭

If we become Sri Lanka, I will swim to Maldives😂

[Stary]

3 hours ago, Wind30 said:

I always think we overspend on the covid fight. I think every cent of the gov money needs to be prudent. 

Suddenly you reminded me about the $880k bin center. 😆

 

[Wind30]

20 minutes ago, Starry said:

Suddenly you reminded me about the $880k bin center. 😆

 

Under Lawrence Wong’s watch?

[Inlinefour]

3 hours ago, inlinesix said:

That sounds like Sri Lanka

🤭

SL no more ikan soup cos vegan eating grass 😭😭😭

[Inlinefour]

32 minutes ago, Arogab said:

Last month I eat fish soup was $9😭, I keep saying Thailand not cheaper than Singapore. Now I run back here and drink Tomyam soup

me missing Poseidon so much 😜😜😜 

 

I mean the buffalo wings 😋😋😋

[BanCoe]

36 minutes ago, Arogab said:

If we become Sri Lanka, I will swim to Maldives😂

No need so far ......... for you Saint Tosa is there lah   

[Thaiyotakamli]

39 minutes ago, Starry said:

Suddenly you reminded me about the $880k bin center. 😆

 

Cheap cheap

 

now inflation easily 1.8m

[Arogab]

28 minutes ago, Inlinefour said:

me missing Poseidon so much 😜😜😜 

 

I mean the buffalo wings 😋😋😋

 

24 minutes ago, BanCoe said:

No need so far ......... for you Saint Tosa is there lah   

You all myst have known many levels😂

[Stary]

deleted

Edited July 19, 2022 by Starry

[kobayashiGT]

17 hours ago, DOBIEMKZ said:

MAS posts $7.4b annual loss, weighed by stronger Singdollar amid soaring inflation

MAS announced that it clocked a net loss of $7.4 billion for the financial year ended March 31, 2022. PHOTO: ST FILE

https://www.straitstimes.com/business/banking/mas-posts-74-billion-annual-loss-weighed-by-stronger-singdollar-amid-soaring-inflation?utm_campaign=stfb&utm_medium=social&utm_source=facebook&fbclid=IwAR0lyHXC460tEihJPmpe3gW-5tfSodwTFreAp8OpCLoS7pMAZ7mlMKx62Qs

Published 19 July 2022

SINGAPORE - Singapore's financial sector went from strength to strength, buoyed by broad-based growth but inflationary pressures, wobbly global growth and global tightening monetary policies have weighed on the central bank's fiscal performance.

The Monetary Authority of Singapore (MAS) on Tuesday (July 19) announced at its annual review that it clocked a net loss of $7.4 billion for the financial year ended March 31, 2022 - the first time in nine years.

The loss came from lower investment gains, a large negative foreign exchange translation effect, and higher interest expenses.

As a result of the loss, MAS did not contribute to Singapore's consolidated fund, out of which government expenditure is made, for the financial year. It had contributed $1.07 billion in fiscal 2021 and $2.17 billion in 2020.

MAS also said that as at end-March, Singapore's official foreign reserves recorded a net loss of $4.7 billion as investment gains of $4 billion were more than offset by the strengthening of the Singapore dollar, which led to a negative foreign exchange translation effect of $8.7 billion.

The Singdollar strengthened 4 per cent against the British pound, 5 per cent against the euro, and 9 per cent against the Japanese yen, MAS noted.

The investment returns from Singapore's reserves supplement its Budget spending. The Government can spend up to 50 per cent of the expected long-term investment returns generated by MAS, GIC and Temasek Holdings – the three entities tasked to manage the reserves.

MAS’ total expenditure for the year increased, to $2.8 billion, due mainly to higher interest expenses on domestic money market operations.

The central bank has been gradually tightening monetary policy since Oct 2021, as inflation continues to rise. A stronger exchange rate makes imports cheaper. It can also decrease Singapore’s exports, dampening economic growth. Both effects can also reduce the pressure to raise wages.

In July, MAS further tightened monetary policy in its second off-cycle move this year.

MAS managing director Ravi Menon said on Tuesday that core inflation is projected to increase to a peak of 4 per cent to 4.5 per cent in the third quarter this year before levelling off to 3.5 per cent to 4 per cent by year end, much higher than what Singapore is used to. Core inflation excludes housing rents and private transport costs.

"If there are fresh shocks to global energy and food supplies arising from the ongoing conflict in Ukraine or a significant overheating of the domestic labour market, inflation may end up being higher and more persistent," he said.

Senior Minister and MAS chairman Tharman Shanmugaratnam said in the report that the central bank had tightened monetary policy four times since Oct 2021 to help ensure medium-term price stability, amid sustained growth in the economy.

"These moves should slow the inflation momentum but cannot fully mitigate the pass-through of higher global inflation, especially in food and energy prices.

"The domestic labour market is tight and some pickup in consumer services inflation is to be expected. However, MAS expects core inflation to stabilise by the latter part of the year," he added.

Tighter financial conditions, coupled with a squeeze on real incomes as a result of rising prices, will drag on growth, Mr Menon said, adding that it is difficult to estimate the extent of the growth slowdown next year given the complex interplay of multiple factors.

In the second half of this year, slowing growth in the global economy will weigh on Singapore's trade-related sectors, even as the domestic-oriented and travel-related sectors continue to recover.

For 2022, Singapore's economy is expected to grow in the lower half of the 3 per cent to 5 per cent forecast range.

Amid the uncertain outlook, a silver lining was the expansion in banking, insurance, asset management and payment services that resulted in a 7.4 per cent value-added growth in the financial sector.

Fintech investments hit a high of US$3.9 billion (S$5.44 billion), while the past year recorded a net creation of 4,300 jobs in financial services.

MAS said the banking sector has maintained healthy asset quality alongside strong capital and liquidity buffers.

Industry stress test results also show that banks would have sufficient buffers to weather shocks from an adverse macroeconomic scenario.

Mr Menon said MAS has updated the financial services industry transformation map (ITM) for the period 2021-25 and will launch it in a couple of months. ITM lays the blueprint of strategies and initiatives to further strengthen Singapore's position as a regional financial hub.

Household balance sheets are also generally resilient and most should be able to service their loans even in the event of sharp interest rate hikes and income loss.

But Mr Menon warned that there will be "a small segment of households" that may be more constrained by rising interest rates.

The household leverage has remained elevated compared with pre-Covid-19, driven by the growth of new housing loans on the back of a buoyant property market since end-2019.

 

We have 6 million population here. 

MAS lose 7.4b

7,400,000,000 divide by 6,000,000 = 1233.333

Issit we need to pay 1,200 dollar more tax? 

 

 

 

 

 

OHHHHH!!!!!!!! GST!!!! no wonder need to increase GST!