GOVERNMENT OF SINGAPORE INVESTMENT CORPORATION (Profit or loss in currency trading)

Mr Low Thia Khiang asked the Minister for Finance what is the profit or loss of the Government of Singapore Investment Corporation in currency trading through the Monetary Authority of Singapore account between 1st March and 30th April 1995 in the trading of US dollars and the yen.

BG Lee Hsien Loong: Mr Speaker, Sir, during the period 1st March 1995 to 30th April 1995, the US dollar to Singapore dollar exchange rate fell from S$1.4495 at the beginning of the period to S$1.394 at the end of the period. This represents a depreciation of the US dollar of 3.8%. On the other hand, the Yen appreciated against the Singapore dollar by 10.4%, from S$1.4983 per 100 Yen to S$1.6536 per 100 Yen.

The GIC manages a diversified portfolio. The exchange loss due to the depreciation of the US dollar has been more than compensated by the exchange gains from holding Yen denominated assets and currency.

Mr Low Thia Khiang: Sir, what is the profit or loss so far for the period stated?

BG Lee Hsien Loong: Mr Speaker, Sir, firstly, GIC does not publish detailed profit or loss figures. Secondly, it manages a diversified portfolio. The effects of the different movements in the portfolio, and of the actions which it has taken to buy and sell and hedge are not easily disentangled solely for the purposes of making an accounting over a short period of time. Suffice it to say that, overall, we have not suffered a tragic loss.

Mr Low Thia Khiang: Sir, is the move by the GIC at a specific period a diversified investment, adjustment investment or an intervention purported to keep the Singapore dollar at a certain margin?

BG Lee Hsien Loong: Mr Speaker, Sir, as the Member would have learned from listening to my earlier answer, MAS cannot determine the value of the Singapore dollar to be something different from what is set by the fundamentals. What it can do is to intervene to moderate movements in the Singapore dollar which are away from the fundamentals and make sure that the Singapore dollar reflects the basic economic situation in Singapore and externally. It cannot intervene in order to buck the market and it certainly does not intervene to manipulate the Singapore dollar to make money.

Mr Low Thia Khiang: Sir, the Deputy Prime Minister's main answer mentioned that the Singapore dollar would have to reflect the economic fundamentals. And I believe he also mentioned that during the period, the value of Singapore dollar was out of the market fundamental and thereby GIC went in to buy and adjust the portfolio investments to ensure that our investments are intact and do not suffer losses.

BG Lee Hsien Loong: Mr Speaker, Sir, I think the Member is confused. The exchange value of the Singapore dollar is one thing. The value of the Singapore reserves which are invested overseas in foreign assets is a different matter. If the US dollar is moving down or moving up, and we know it, we have some room to adjust our portfolio in or out of the US dollar, as the case may be. But that means from US dollars to Deutschemark, US dollars to Yen, Australian dollars, Canadian dollars, and not from the US dollars to Singapore dollars, because these are, by definition, our foreign reserves which are being managed. So the movements of the foreign currencies have implications in the way GIC would manage our assets. But that is quite different from the question of what is the exchange rate of the Singapore dollar today and what was it on 1st March.