The Monetary Authority of Singapore (MAS) will disclose its first six-monthly report on its currency intervention operations on Thursday.
The disclosure is being made earlier than previously scheduled, to provide more timely information to financial markets amid the coronavirus-induced turmoil.
Currency interventions are integral to MAS' management of its Singapore dollar-based monetary policy.
MAS intervenes in the foreign exchange (forex) market as and when needed to keep the value of Singapore's currency within the policy band's boundaries. This means it will buy or sell the currency to ensure domestic price stability.
MAS said in a statement yesterday that it will be bringing forward the forex intervention disclosure date - originally scheduled for July - to provide market participants with a better grasp of the actions that MAS has undertaken to implement its monetary policy stance.
"The disclosure seeks to enhance the market's understanding of the actions that MAS has undertaken to implement its monetary policy stance, while preserving MAS' operational effectiveness," MAS said in the statement.
The move will also align the disclosure with the policy cycle after MAS brought forward to March its monetary policy statement usually made in April.
MAS eased its policy on the Singdollar on March 30 by setting the currency on a 0 per cent appreciation path at the prevailing lower level of its exchange rate policy band, as Singapore braces itself for its worst recession ever.
The Government announced yesterday a third round of stimulus to help households and businesses tide over the hardships wrought by the pandemic.
The additional measures will cost $5.1 billion. Together with the two earlier packages, the total stimulus to the economy now stands at $59.9 billion, or about 12 per cent of gross domestic product (GDP).
The forex data to be released by MAS on Thursday will include net purchase of foreign exchange from MAS' intervention operations from July 1, 2019, to Dec 31, 2019.
"Henceforth, MAS will release the data on a six-monthly basis, on the first business day of every April and October," it said.
To preserve the operational effectiveness of the interventions, the data on net forex purchases will be on a six-month aggregated basis, and with a three-month lag from the end of the period.
Unlike most central banks that target interest rates, MAS' monetary policy framework is centred on managing the Singapore dollar against an undisclosed trade-weighted basket of currencies of major trading partners and competitors.
That basket is also known as the Singapore dollar nominal effective exchange rate (S$NEER). MAS' foreign exchange intervention operations are focused on keeping the S$NEER within its policy band, so as to keep inflation low over the medium term.
According to the Bank for International Settlements (BIS): "In a small and open economy such as Singapore, where gross exports and imports of goods and services are more than 300 per cent of GDP and almost 40 cents of every dollar spent domestically is on imports, the exchange rate has a much stronger influence on inflation than the interest rates."
Foreign exchange interventions are necessary against market pressure, which may drive the S$NEER away from a level consistent with domestic price stability, said BIS in a report on MAS' reserve management.
