IMF Staff Country Reports

Singapore: Selected Issues

Publication Date:

November 14, 2013

Electronic Access:

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Summary:

This Selected Issues Paper discusses some observations on Singapore’s monetary policy framework. Singapore’s monetary policy uses the nominal effective exchange rate (NEER) as the instrument in a basket-band-crawl framework. The paper finds that under some conditions an exchange rate-based monetary policy may not be detrimental to external competitiveness. A key parameter is the weight of imports in the consumer basket or production function. Tightening monetary policy through a nominal appreciation helps to dampen imported cost pressures. In addition, nominal appreciation can reduce domestic sources of inflation by lowering demand for local factors of production.

Series:

Country Report No. 2013/327

Subject:

Foreign exchange Inflation Labor Labor force Prices Production Productivity Real effective exchange rates Wages