Singapore's exposure to US subprime mortgage markets is small and contained, officials said yesterday, but warned that a resulting slowdown in major economies will affect the city-state's growth.
Singapore's central bank is "closely monitoring our financial institutions' exposure to sub-prime and other structured credit markets, at both the domestic and global levels," S. Iswaran, minister of state for trade and industry, said in parliament.
"Our exposure remains small and contained at this stage," Iswaran said.
He added that the central bank remained vigilant and was ready to inject liquidity into the banking system if needed.
Iswaran also said, however, that a loss of confidence and a general credit squeeze resulting from uncertainty in financial markets could impact the trade-dependent country.
"Strong growth in the region and the diversity of our export markets will provide us some buffer, but we are not immune to a slowdown in the major industrial economies," Iswaran said.
Iswaran said Singapore's economic growth forecast of 7 percent to 8 percent this year remained unchanged.
Singapore's local financial institutions do not offer mortgages to subprime customers, but have investments in collateralized debt obligations -- complex bundles of debt repackaged as securities -- 25 percent of which contain US subprime mortgages, Second Minister for Finance Tharman Shanmugaratnam also told lawmakers.
The total investment in CDOs by local banks amount to S$2.6 billion (US$1.71 billion), making up just 1 percent of the banks' capital base, Tharman said.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
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