Regional Trading Agreements
Historial Exchange Rate Regime of Asian Countries
 
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  Untitled Document
Singapore
  Created in 1967, the Singapore Dollar originally followed a exchange rate with a fixed link to a single currency. It was formerly linked to Pound Sterling. After the dismantling of the Sterling Area in early 1970s, the Singapore Dollar was linked to the U.S. Dollar for a short period of time.

Noticing its complicated links in trade to other countries and regions, from 1973 to 1985, Singapore pegged the value of Singapore Dollar against a fixed and undisclosed trade-weighted basket of currencies. Since 1985, with an aim to a more market-oriented regime, Singapore allowed its currency to float under the monitor of the Monetary Authority of Singapore (MAS), which retains responsibility for exchange control matters in Singapore. (IMF 1979, p.356).

The present exchange regime of Singapore may be classified as a Monitoring Band. With a primary goal to maintain public confidence, the currency in circulation is 100 % backed by international assets for notes-issuance. The MAS monitors the Singapore dollar against an undisclosed basket of currencies of Singapore's major trading partners and competitors. The central parity is determined on the basis of countries that are the main sources of imported inflation and competition in export markets. There is an undisclosed target band around the computed central parity. Both the central parity and the bandwidth are periodically reviewed to ensure that they are always"consistent with economic fundamentals and market conditions" (Rajan and Siregar, 2002, p.8-9)

Rajan and Siregar (2002) viewed this exchange regime of Singapore as an effective measure in maintaining domestic price stabilities and export competitiveness for small and open economies. In addition, it has a large degree of flexibility during great economic fluctuations. During the height of the East Asian crisis, the MAS allowed the Singapore dollar to depreciate by about 20 %.

Sources of reference include:

1. World Currency Yearbook. (WCY)
2. IMF Annual Report on Exchange Arrangement and Exchange Restriction. (IMF)
3. Rajan, Ramkishen S. and Siregar, Reza (2002): "Choice Of Exchange Rate Regime: Currency Board (Hong Kong) Or Monitoring Band (Singapore)?", IPS (The Institute of Policy Studies) Working Paper, No. 12.
   
 
Date
Changes to the exchange rate regime
Singapore Dollar per U.S. Dollar
19 May 1967The Singapore Dollar (S$) was created (WCY 1984, p.661)   
12 June 1967The old Sterling-linked Malyasian/Straits Dollar was replaced by the independent Dollars of Singapore, Malaysia and Brunei. All three currencies were freely interchangeable at par. (WCY 1984, p.661)  3.061 
20 December 1971Following the de facto devaluation of U.S. Dollar, through its fixed link to the Pound Sterling at S$7.3469=£ 1.00, the Singapore Dollar appreciated against U.S. dollar. A 4.5% fluctuation range was introduced, creating an Effective Rate. (WCY 1984, p.661)  2.820 
25 June 1972With the floating of Sterling and the dismantling of the Sterling Area, the Singapore Dollar would abandon the British unit and be linked to the U.S. Dollar with a fluctuation range.(WCY 1984, p.661) 2.756-2.833 
13 February 1973Following the devaluation of U.S. Dollar, the Singapore Dollar was realigned. (WCY 1984, p.661)  2.538 
8 May 1973The accord with Malaysia that provided for the free exchangeability at par of the Singapore and Malyasian Dollars was abrogated. (WCY 1984, p.661)  
20 June 1973Singapore placed the Effective Rate for the currency on a controlled, floating basis, with its exchange value determined against a "basket of currencies. " representing Singapore's major trading partners (WCY 1984, p.661). The exchange rate of the Singapore Dollar in terms of the U.S. Dollar, the intervention currency, was to be determined in the foreing exchange market. Rates for other currencies were to be established on the basis of the daily rate for the U.S. dollar and their cross rates in international markets. (IMF 1979, p.356)

Since then, the authorities have not maintained the exchange rate within announced margins around the par value of 0.290299 gram of fine gold per Singapore Dollar. (IMF 1976, p.394) 

 
21 July 1975The US$150 gold coin were to be treated as gold and could be dealt with in the same way as gold; previously, this coin was treated as local currency and could be imported and exported in the same way as Singapore currency notes. (IMF 1976, p.396)  
1 June 1978All foreign exchange controls on the Singapore Dollar were abolished. (WCY 1984, p.661) All companies, individuals, and banks could freely deal in foreign currencies, spot and forward. (IMF 1979, p.357)  
7 September 1984Trading in Eurodollar time deposit interest rate and currency futures contracts of deutsche market against U.S. Dollars commenced at the Singapore International Monetary Exchange (SIMEX). (IMF 1985, p.440)  
6 November 1984Trading in currency futures contracts of Japanese Yen against U.S. Dollars commenced at the SIMEX. (IMF 1985, p.440)  
1985The Effective Rate was replaced by an Interbank Rate. (WCY 1990-1993, p.516)

Singapore adopted a policy whereby the Singapore Dollar would be permitted to float according to supply and demand on the foreign exchange market, but would be monitered by the Monetary Authority against the trade-weighted basket of currencies. (WCY 1988-1989, p. 518) 

 
1998The authorities use the exchange rate as an intermediate target, allowing the Singapore Dollar to fluctuate within an undisclosed band. The authorities widened this target during the Asian crisis, but did not publicly announce the width of the band. (IMF 1999, p.773)  
© 2000 The Chinese University of Hong Kong