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Singapore central bank posts $6.3B loss

(Agencies)
Updated: 2009-07-16 16:19

SINGAPORE: Singapore's central bank said the financial crisis and global recession battered its assets last year, dragging it to a loss of more than $6 billion.

The bank, known as the Monetary Authority of Singapore, said Thursday it suffered a net loss of 9.2 billion Singapore dollars ($6.3 billion) in its fiscal year ended March, or about 3.5 percent of the bank's average assets.

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"MAS's investment was negatively affected by this crisis," Managing Director Heng Swee Keat said in a speech. "This severe crisis has pared back about 80 percent of the gains in the preceding two years."

Heng said most of the bank's investments are in bonds, with some exposure to equities in the US, Europe and Japan.

The bank reported a profit of SG$7.4 billion in the previous financial year. A surge in markets since March has helped the bank recoup some of the earlier losses, Heng said.

"With the broad-based upturn in financial markets after the close of the financial year, the valuation of MAS' foreign assets has improved and more than half of the losses have been recovered," Heng said.

The bank also slightly raised its 2009 inflation forecast, citing rising commodity costs for higher than expected prices.

It now expects inflation between 0.5 percent and a drop of 0.5 percent. The bank's previous forecast was a range of no change in prices and a drop of 1 percent.

"This revision takes into account the recent developments in global commodity prices," Heng said. "In tandem with the weak demand and easing domestic costs, consumer price increases are expected to be muted."

A severe recession in Singapore this year has helped undermine consumer demand. The consumer price index fell 0.3 percent in the 12 months through May, dropping from a 26-year high of 7.5 percent in June 2008.

A fall in energy costs from last year accounts for much of the slide in prices. However, crude oil rebounded to above $73 a barrel on June 30 from under $35 in March.