RISING SINGAPORE DOLLAR (Impact on export industries)

Dr Wong Kwei Cheong asked the Minister for Finance when will the Government complete its study of the impact of the rising Singapore dollar on our export industries and when he expects the results of the study to be released.

The Deputy Prime Minister (BG Lee Hsien Loong): Mr Speaker, Sir, the Monetary Authority of Singapore, with assistance from the Ministry of Trade and Industry and its statutory boards, is looking into the impact of recent movements in the Singapore dollar exchange rate on the component factors of the Singapore economy. Apart from empirical analysis of compiled data, the study will also involve in-depth surveys of companies in the different sectors and industries. This will take several months.

The study is meant for the Government's internal deliberation and the results will not be released to the public. Much of the information supplied by companies is confidential and not suitable for publication.

The Government's view of the Singapore dollar exchange rate was recently restated in my speech on 21st April 1995 to the Singapore International Chamber of Commerce. The value of the Singapore dollar is determined by economic fundamentals. MAS will continue to intervene, whenever necessary, against exchange rate movements which are not supported by fundamentals. In recent months, the Singapore dollar has appreciated against the US dollar, but it has depreciated against the Yen and the Deutschemark. This is unlike the Yen, which has risen against all currencies.

At the level of individual companies, exporters to the US face pressure on margins because of the weakness of the US dollar. On the other hand, exporters to Europe and Japan are benefitting from the strengthening of the Yen and the Deutschemark. Overall, the value of the Singapore dollar has remained little changed, measured against a basket of currencies of Singapore's major trading partners and competitors. The recent exchange rate movements are thus unlikely to have a significant impact on the Singapore economy as a whole.