The Monetary Authority of Singapore reported a net loss of S$7.4 billion for the financial year that ended on 31 March 2022.
This is the first time such an event happened in nine years. In 2013, MAS posted an annual loss of S$10.61 billion.
According to MAS, the loss reflected lower investment gains, a large negative foreign exchange translation effect, as well as higher interest expenses.
Investment gains were at S$4 billion, which was down S$22.8 billion from the last financial year. Moreover, the appreciation of the Singapore Dollar also led to a negative foreign exchange translation effect of S$8.7 billion.
The Singapore dollar rose 9% against the Japanese Yen, 4% against the Pound Sterling, and 5% against the Euro.
The total expenditure also increased by S$2.8 billion. This can be attributed to high interest in domestic money market operations.
MAS is one of the three investment institutions that manage the government’s reserves, alongside Temasek which reported a 5.81% return, and sovereign wealth fund GIC, which doesn’t report its assets.
Despite this, the founder of sovereign wealth fund research house Global SWF Diego Lopez said that this should not cause concern.
“As you know, MAS has today around S$628.1 billion in assets, so a net loss of S$7.4 billion (-1.1% RoA) does not sound excessive when put in the global context and understanding the foreign exchange effect,” Lopez shared.
“Unlike Temasek, which has the benefit of having an illiquid portfolio, MAS is very much affected by interest rates and the stock markets, which are not faring well at the moment,” he added.
Inflation was also a huge determining factor in the downturn. According to MAS managing director Ravi Menon, taming inflation is like trying to slow down a speeding car on a slope. It takes calibration and forcefulness.
Singapore’s economic growth is expected to stabilise in 2023, but its growth will largely depend on how the global economy fares.
“As of now, we expect neither a recession nor a stagflation in Singapore next year,” he added.
The country is still on track to come within the lower half of the 3% to 5% GDP growth forecast, according to MAS.