Reserves have fallen by US$34bn since July.
Singapore is spending billions of reserves to prop up its currency, a report by DBS revealed.
According to DBS, Singapore’s reserves have fallen by US$34 billion since July, a trade-off of keeping the SGD on its appreciation path.
“In six short months, reserves have fallen by the equvialent of 11% of a full year’s GDP. Little wonder the central bank eased back on the appreciation path in late-January, Further easing will be necessary if reserves don’t stop falling,” the report stated.
Singapore is not alone in using reserves to keep the currency strong. China’s reserves have fallen by US$150b, causing the yuan to barely fall against the dollar. Meanwhile, Thailand, Malaysia, the Philippines and Taiwan have all spent the equivalent of 1%-4% of a full year’s GDP just over the past six months supporting exchange rates.