MAS books $3.8b net profit as global markets recover and Sing$ weakens

It believes global growth will stay steady in 2024, maintains S’pore inflation forecasts

- Ovais Subhani

Rebounding bond and stock markets worldwide and a weaker Singapore dollar have helped the Republic’s central bank swing to a net profit of $3.8 billion.

The Monetary Authority of Singapore (MAS), in its annual report for the financial year 2023-2024 ending March 31, 2024, said the profit was aided by an investment gain of $12.7 billion and positive currency translation effects of $1.7 billion, resulting in an overall profit of $14.4 billion.

In FY2022-2023, MAS recorded a net loss of $30.8 billion, its largest loss ever recorded. That was because of negative effects from currency translation and high interest expenses.

The central bank’s gains and losses emerge from its conduct of monetary operations to manage the Singapore dollar against a trade-weighted basket of currencies – also called the Singapore dollar nominal effective exchange rate (S$Neer) – aimed at achieving price stability in the medium term.

As part of the monetary operations, MAS may buy or sell currencies in the spot foreign exchange market. It also manages Singapore dollar liquidity in the banking system through money market operations.

The monetary operations may result in accumulation or depletion of the official foreign reserves (OFR), which stood at $497.6 billion at the end of FY2023-2024.

If the accumulation of OFR goes beyond the optimal size of about 65 per cent to 75 per cent of gross domestic product, MAS may subscribe to Reserves Management Government Securities (RMGS) for longer-term management by sovereign wealth fund GIC. This enables such foreign assets to be invested in longer-term, higher-yielding assets.

As MAS’ financial results are reported in Singapore dollars, currency movements of the Singapore dollar against foreign currencies of the OFR will result in translation effects in MAS’ financial statements.