Singapore PM Wong opposes weakening currency — CNBC

Singapore Prime Minister Lawrence Wong has spoken out against weakening the Singapore dollar to boost competitiveness. At the Asia Future Forward conference in Singapore, he said that a strong and stable currency should reflect the country’s economic fundamentals and help contain imported inflation, CNBC reports.

Stability instead of devaluation

During a conversation with DBS CEO Tan Su Shan, Wong humorously responded to suggestions of a possible exchange-rate reduction. He asked whether he was really being advised to lower the exchange rate to make the country more competitive.

According to the prime minister, monetary policy is independently conducted by the Monetary Authority of Singapore. Unlike most major central banks, which primarily influence financial conditions through interest rates, Singapore’s regulator conducts policy through the exchange rate.

The Monetary Authority manages the Singapore dollar’s exchange rate against a basket of currencies of the country’s key trading partners, allowing it to fluctuate within a non-public band. This approach is linked to Singapore’s high dependence on international trade and imports.

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Impact on prices and exporters

A stronger Singapore dollar helps mitigate the cost of imported goods and services, particularly during periods of elevated global inflation. At the same time, it makes goods and services produced in Singapore more expensive for overseas buyers and increases pressure on exporters.

Since the beginning of the year, the Singapore dollar has strengthened by nearly 0.4% against the US dollar. Wong acknowledged that exporting companies must take this into account alongside other business costs, as Singapore is not the cheapest location in Southeast Asia.

Betting on the economy’s opportunities

In Wong’s view, the country cannot compete on price alone. He noted that businesses are not looking for the cheapest places to operate, but for opportunities, stability and predictability.

Singapore is developing industrial ecosystems that combine multinational corporations, local suppliers, research capabilities and skilled workers. According to the prime minister, the country’s competitiveness depends on the value it can offer companies, rather than on a cost advantage.