Domestic money markets functioning normally: MAS

THE Monetary Authority of Singapore (MAS) said on Friday afternoon that the Singapore dollar nominal effective exchange rate (S$NEER) remains well within its policy band, notwithstanding increased volatility in international foreign-exchange markets over the last few days.

"Domestic money markets continue to function normally and there is ample liquidity in the system," it said.

The Singdollar has fallen some 2 per cent since Wednesday in line with other regional currencies as a bullish USD took markets by surprise following the unexpected US presidential election results which will see Donald Trump in the White House come January.

"Across the region, volatility has been quite intense," said Saktiandi Supaat, head of FX research at Maybank Singapore.

Singapore's exchange rate-centred monetary policy framework provides sufficient flexibility to accommodate fluctuations in bilateral exchange rates of the Singapore dollar against other currencies, MAS said.

MAS does not target any bilateral exchange rate. The monetary policy stance remains as announced in October 2016, it said. MAS left monetary policy stance unchanged in October. It kept the (S$NEER) policy band at a zero per cent appreciation rate, with the width and level untouched. The primary driver of MAS policy is its core inflation outlook, for which growth is one of several key factors.

"MAS continues to closely monitor developments in the external environment and their impact on financial markets and the domestic economy, it said. "MAS stands ready to curb excessive volatility in the trade-weighted Singapore dollar if needed."