S’pore MAS: Sibor rates decline not a concern

Gaurav Raghuvanshi & David Roman
Dow Jones Newswires

Singapore’s government said Thursday a steep drop in the country’s interbank lending rates to all-time lows is not a matter of concern, shrugging off concerns that cheap credit may overheat the already fast-growing economy.

Ong Chong Tee, Deputy Managing Director of the Monetary Authority of Singapore, told reporters that a fall in so-called Sibor rates is in part a reflection of market expectations of a stronger Singapore currency, after MAS switched to a currency appreciation policy from a neutral policy last month.

In addition, “the decline in Sibor (rates) should be seen in the context of continued low global low interest rates, especially in the U.S,” he added.

Benchmark three-month Sibor rates stood Wednesday at 0.52417%, well below the 0.66% level recorded in early April before the MAS policy change, and recent highs at over 2% reached during the 2008 financial crisis. Unlike most central banks, the MAS conducts monetary policy through the exchange rate rather than policy rates.

Analysts say the Sibor drop may complicate recent government efforts to rein in rising asset prices, in particular a surging real estate market. According to figures released Thursday, Singapore’s economy expanded by 15.5% year-on-year in the first quarter, its fastest pace on record and better than the 13.1% previously estimated.

Last month, the government raised its annual growth forecast to between 7% and 9%.


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