MAS posts S$10.9 billion loss

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MAS posts S$10.9 billion loss

Postby LOLMum » Thu Jul 21, 2011 7:45 pm

ASIAONE / BUSINESS / NEWS / STORY

Thursday, Jul 21, 2011
Reuters

MAS posts S$10.9 billion loss


SINGAPORE - Singapore's central bank lost nearly S$11 billion in its last financial year, its biggest-ever annual loss, as the strong local dollar reduced the value of reserves held in other currencies, according to an annual report released on Thursday.

For the 12 months ended March 31, 2011, the Monetary Authority of Singapore (MAS) posted a net loss of S$10.94 billion compared with a net profit of S$9.96 billion a year ago.

"MAS made investment gains of S$12.3 billion but recorded an overall loss of S$10.9 billion due to the strong Sing dollar," Managing Director Ravi Menon said at a briefing on the central bank's annual report.

MAS had lost money on an annual basis only once before in its 40-year history and that was during the financial crisis, he added.

The Singapore dollar , which hit a record high of 1.2138 against the US dollar on Wednesday, has been one of the strongest-performing Asian currencies in the past two years.

According to MAS, the Singapore dollar rose 10 percent against the US dollar and 5.5 percent against the euro over the course of the 2010/11 financial year.

The city-state's currency has gained about 5.6 percent against the US dollar so far this year.

MAS held S$299.8 billion in assets at end-March 2011, with foreign financial assets accounting for S$287.7 billion.

The central bank incurred S$170 million in staff costs in financial year 2010/2011, an increase of 24 percent over 2009/2010

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Re: MAS posts S$10.9 billion loss

Postby vicki » Thu Jul 21, 2011 9:10 pm

Wah!! That's ALOT of loss!!!

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Re: MAS posts S$10.9 billion loss

Postby linden2000 » Thu Jul 21, 2011 11:02 pm

It's an accounting translation loss due to strong sgd so it's a paper loss.
Not investment-related.

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Re: MAS posts S$10.9 billion loss

Postby Kopiseesiewtai » Fri Jul 22, 2011 5:59 am

Omg

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Re: MAS posts S$10.9 billion loss

Postby THC » Sat Jul 23, 2011 5:50 am

Correct me if i wrong.
Investment gain $12.3B, overall lost $10.9B so currency exchange losses mounted to $23.2B. Right ? Aren't they suppose to hedge the exchange rate losses ?

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Re: MAS posts S$10.9 billion loss

Postby 3Boys » Sat Jul 23, 2011 11:51 am

THC wrote:Correct me if i wrong.
Investment gain $12.3B, overall lost $10.9B so currency exchange losses mounted to $23.2B. Right ? Aren't they suppose to hedge the exchange rate losses ?


I am actually surprised that MAS is involved in investment related activities. I suspect their remit is a little different from Temasek and GIC, whom I expect should be hedging currency fluctuations (although even they can never completely mitigate). If MAS are meant to diversify across a basket of different currencies, then I don't see that a primary objective would be to hedge at all (defeats the purpose of diversification).

As someone else said, its an accounting loss.

But now wait for the gahmen bashers to come pouring in..........

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Re: MAS posts S$10.9 billion loss

Postby 3Boys » Sat Jul 23, 2011 11:55 am

Here you go --> http://www.sgs.gov.sg/macro_overview/ma ... _mone.html

MAS controls exchange rates (i.e. strength of S$). If they wanted to look good, they could easily have allowed the S$ to slide against other major currencies (i.e relative value of investments increase). But their role is not make themselves look good, its to plot the right currency policy for Singapore.

So, some perspective, yah?

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Re: MAS posts S$10.9 billion loss

Postby Chenonceau » Sat Jul 23, 2011 5:45 pm

MAS holds reserves. It is prudent to hold them in a basket of currencies. US dollar is part of every basket of currencies and that has really depreciated vis-a-vis the Singapore dollar. I don't see this as a big deal because if your currency is strong, it means your economy is generating wealth. Of course, it puts you at a trading disadvantage but it still means that we have a robust economy, and as long as we're not about to break the bank and cash out all the reserves, it's a paper loss... and will recover with time.

Whose investment portfolio doesn't go up and down in the short term? As long as you are confident that over the long term, there is a good spread of risks, then it should be ok.

Bad news is - we have a paper loss because our currency is strong.
Good news is - we have a strong economy.

To my limited understanding, this is almost a non event.

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Re: MAS posts S$10.9 billion loss

Postby WeiHan » Sat Jul 23, 2011 9:25 pm

To me, it is evident that the Keynesian economic hypothesis is prevalent in MAS. There is no attempt at all to keep a part of our reserve in gold. Gold is also money and it is not just money, but real money opposing all other form of currencies which are all fiat currencies. All fiat currencies ultimately diminish its real purchase power and only gold hold up purchasing power over long term. It is sad that nobody recognise this even during this critical juncture of time.

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Re: MAS posts S$10.9 billion loss

Postby 3Boys » Sat Jul 23, 2011 11:54 pm

Chenonceau wrote:To my limited understanding, this is almost a non event.


Likewise

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