Comments

David Thompson Posted:
So very, very true. It beggars belief that we consider ourselves to be a developed nation when so much of our economy is based on selling milk powder or logs. BTW, I own a Plinius amplifier (my second) that drives a set of Theophany speakers.
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David Thompson Posted:
A robust but sobering report. It concerns me that confidence is rising, yet sales and exports are down and "manufacturers and exporters are still lagging behind other sectors". Surely we should wait until we're earning more money before we start spending more?
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siemens Posted:
Yes true! The only thing that will never die in this world is the nature and its science behind it. Great post.
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Kieran Ormandy Posted:
Thanks for the question Steven, Germany has seen increases in manufacturing employment since 2009, and Switzerland has had stable manufacturing employment between 2006 – 2011, even in the face of ongoing Euro-zone issues. Korea has seen increases in manufacturing employment since 2008 and Israel experienced large increases since 1998, while being stable over the last 4 years. Singapore has had increases in manufacturing employment over the last two years. These countries all value their manufacturing sectors and work to protect them, this is reflected in the above numbers and their performance through the GFC. Note data around the above examples was sourced from OECD labour market stats.
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John Walley Posted:
Point one: you should have no doubt what our Association says publically represent the views of our members. Point two: we don’t knee jerk responses, if you trace back our comments around NZPower you will see them link all the way back to our research in 2004 and 2005. All that material is fully linked from our comments above. Point three: you will note our comments on major users, sadly the same advantage does not accrue to smaller industrial users. The perverse incentives of the LRMC approach in all this are well known. Point four: the NZMEA is not like any other Association in New Zealand we admit only manufacturers and exporters into membership, and our public expressions are the views of that restricted membership.
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14/12/09

Getting things done the Singapore way


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Singapore’s economic success has not arrived by coincidence. It is the result of political and economic pragmatism over a long period – they identify a problem and they try to fix it. This timeline of changes to their exchange rate regime shows how they have adjusted both to changing international conditions and internal economic issues (more here).

 Date Changes to the exchange rate regime Singapore Dollars per U.S. Dollar
19 May 1967 The Singapore Dollar (S$) was created (WCY 1984, p.661)  
12 June 1967 The old Sterling-linked Malaysian/Straits Dollar was replaced by the independent Dollars of Singapore, Malaysia and Brunei. All three currencies were freely interchangeable at par. (WCY 1984, p.661) 3.061
20 December 1971 Following the de facto devaluation of U.S. Dollar, through its fixed link to the Pound Sterling at S$7.3469=£ 1.00, the Singapore Dollar appreciated against U.S. dollar. A 4.5% fluctuation range was introduced, creating an Effective Rate. (WCY 1984, p.661) 2.820
25 June 1972 With the floating of Sterling and the dismantling of the Sterling Area, the Singapore Dollar would abandon the British unit and be linked to the U.S. Dollar with a fluctuation range.(WCY 1984, p.661) 2.756-2.833
13 February 1973 Following the devaluation of U.S. Dollar, the Singapore Dollar was realigned. (WCY 1984, p.661) 2.538
8 May 1973 The accord with Malaysia that provided for the free exchangeability at par of the Singapore and Malaysian Dollars was abrogated. (WCY 1984, p.661)  
20 June 1973 Singapore placed the Effective Rate for the currency on a controlled, floating basis, with its exchange value determined against a "basket of currencies" representing Singapore's major trading partners (WCY 1984, p.661). The exchange rate of the Singapore Dollar in U.S. Dollar terms, the intervention currency, was to be determined in the foreign exchange market. Rates for other currencies were to be established on the basis of the daily rate for the U.S. dollar and their cross rates in international markets. (IMF 1979, p.356)
Since then, the authorities have not maintained the exchange rate within announced margins around the par value of 0.290299 gram of fine gold per Singapore Dollar. (IMF 1976, p.394)
 
21 July 1975 The US$150 gold coins were to be treated as gold and could be dealt with in the same way as gold; previously, this coin was treated as local currency and could be imported and exported in the same way as Singapore currency notes. (IMF 1976, p.396)  
1 June 1978 All foreign exchange controls on the Singapore Dollar were abolished. (WCY 1984, p.661) All companies, individuals, and banks could freely deal in foreign currencies, spot and forward. (IMF 1979, p.357)  
7 September 1984 Trading in Eurodollar time deposit interest rate and currency futures contracts of deutsche market against U.S. Dollars commenced at the Singapore International Monetary Exchange (SIMEX). (IMF 1985, p.440)  
6 November 1984 Trading in currency futures contracts of Japanese Yen against U.S. Dollars commenced at the SIMEX. (IMF 1985, p.440)  
1985 The Effective Rate was replaced by an Interbank Rate. (WCY 1990-1993, p.516)
Singapore adopted a policy whereby the Singapore Dollar would be permitted to float according to supply and demand on the foreign exchange market, but would be monitored by the Monetary Authority against the trade-weighted basket of currencies. (WCY 1988-1989, p. 518)
 
1998 The authorities use the exchange rate as an intermediate target, allowing the Singapore Dollar to fluctuate within an undisclosed band. The authorities widened this target during the Asian crisis, but did not publicly announce the width of the band. (IMF 1999, p.773)  

Reference:
World Currency Yearbook. (WCY)
IMF Annual Report on Exchange Arrangement and Exchange Restriction. (IMF)
Rajan, Ramkishen S. and Siregar, Reza (2002): "Choice Of Exchange Rate Regime: Currency Board (Hong Kong) Or Monitoring Band (Singapore)?", IPS (The Institute of Policy Studies) Working Paper, No. 12.


As the exchange rate, inflation and overnight interest rate charts demonstrate they now have a stable suite of economic indicators.

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There is a lot we can learn here – identify the real problem, seek effective solutions and take some action. The solution doesn’t need to be perfect, only better than what currently exists; if it works fine, if not, try something else.

Our Government announced a plan to assess its effectiveness in improving productivity on a yearly basis at the beginning of their term. This could extend to a review of the stability of our major economic indicators; clearly it can be done as demonstrated here.

We really do not need to wait another year for the manifestation of yet more imbalances in our economy before we look to changing our policy framework.
 



tags: exchange rate, cpi, interest rates, singapore

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