MAS eases Singaporean dollar policy to boost investment

MAS eases Singaporean dollar policy to boost investment

SINGAPORE (Reuters): Singapore's central bank on Wednesday
announced moves aimed at increasing foreign investment that eased
but did not lift its "non-internationalization" policy on the
local dollar.

The Monetary Authority of Singapore (MAS) said banks could now
make transactions in Singapore dollar currency options with other
banks and financial institutions in Singapore that are subject to
central bank regulation.

The move was intended to facilitate the use of currency
options as hedging instruments.

Banks can now also lend Singapore dollars to non-residents for
investment in the city state, while non-residents can obtain
Singapore dollar credit to fund offshore activities as long as
the proceeds are swapped into a foreign currency.

"In the past, MAS has sought to limit participation in the S$
markets by foreign investors in order to minimize volatility in
the S$ exchange rate," MAS managing director Koh Yong Guan said
in a statement.

"As S$ capital markets have deepened and developed over the
last few years, this is no longer a policy objective. With the
latest revisions...the primary objectives of the S$ policy are to
limit borrowing of S$ by non-residents for currency speculation
and to discourage the development of an offshore S$ market."

The central bank said the moves would not alter MAS control
over the local dollar but were intended to allow greater
participation by international investors and financial
institutions in Singapore's capital markets.

The MAS said the move would help broaden the investor base for
Singapore dollar assets as non-residents could now obtain
Singapore dollar funding for investment in Singapore dollar
equities, bonds and real estate.

The Singapore dollar was trading at 1.7395/05 per U.S. dollar
on Wednesday afternoon, relatively steady since the MAS
announcement.