A report by DBS shows that Singapore’s reserves fell by US$34 billion since July. This is because Singapore’s government is spending billions of dollars from its reserves trying to prop up its currency.
“In 6 short months, Singapore’s reserves have fallen by the equivalent of 11% of a full year’s GDP. Little wonder hat the central bank eased back on the appreciation path in late January. Further easing will be necessary if reserves don’t stop falling.”
Singapore is not the only country that uses its reserves to push up its currency. China’s reserves fell US$150 billion, causing the yuan to barely even depreciate against the US dollar. Meanwhile, Thailand, Malaysia, the Philippines and Taiwan have spent 1-4% of their GDPs over the past 6 years supporting their currencies.