A DEAL with the United States Federal Reserve to ensure banks here have easy access to the greenback has been extended for another six months.
The Monetary Authority of Singapore (MAS) said last night that it has joined counterparts from all over the world in re-establishing a temporary swap line with the US Federal Reserve to last till Oct 30 this year.
This new deal will again inject about US$30 billion (S$44 billion) worth of US dollar liqudity into each country.
'The swap facility represents on-going co-operation between the Federal Reserve and MAS to enhance the robustness of the US dollar funding and foreign exchange markets in Singapore by reassuring global financial institutions operating in Singapore that they have access to US dollar liquidity,' said the MAS in a statement on Tuesday night.
Singapore's central bank added that the swap lines provide US dollar liquidity to institutions to help improve liquidity conditions in an ailing global financial market.
The extension applies to swap lines between the Fed and 13 other central banks from Australia to Brazil, from Europe to Asia.
The pact was first struck last October - in a first for Singapore - to help boost liquidity in global financial markets and ease the flow of US dollars, said MAS.
Borrowing costs rose sharply in the last quarter of last year, as banks became increasingly cautious about lending to one another as the financial crisis unfolded.
This raised the risk that when institutions in the region need US dollars, they may be forced into weakening their home currencies, said a report by Goldman Sachs economists at the time.
The same report also indicated that Singapore's swap line would help ease difficulties in obtaining US-dollar funding within Asia.
