Prime Minister Lawrence Wong of Singapore.
Vincent Tian | AFP | Getty Images
SINGAPORE — Singapore Prime Minister Lawrence Wong has spoken out against the idea of weakening the country. singapore dollar To increase competitiveness, city-states must instead rely on their economic strength, even if a strong currency increases costs for businesses, he said.
Mr Wong said Singapore can continue to expect stable currency strength if the economy continues to perform well, and emphasized the country’s role in curbing import inflation.
“I’m not saying we should lower the exchange rate to be more competitive,” Wong said in a light-hearted exchange with DBS Chief Executive Tan Hsu Siang at the bank’s Asia Future Forward conference in Singapore on Monday.
His remarks came after he stressed Singapore’s reputation as a safe haven, which helps attract capital and support the local currency, while acknowledging that the city-state remains a relatively expensive place to do business.
“MAS exercises monetary policy independently. The Singapore dollar reflects the fundamentals of the economy, and if the economy is doing well, we can continue to expect a strong and stable Singapore dollar based on fundamentals, which will also help control imported inflation,” Wong said.
Unlike most major central banks, which primarily use interest rates to manage financial conditions, the Monetary Authority of Singapore manages policy through exchange rates.
It manages the Singapore dollar against a basket of currencies of the country’s main trading partners, allowing exchange rates to fluctuate within undisclosed policy limits.
This approach reflects Singapore’s heavy dependence on international trade and imports, making currency movements particularly important for domestic prices.
A stronger Singapore dollar helps cushion the cost of imported goods and services, especially during periods of rising global inflation. However, it could also make goods and services produced in Singapore more expensive for overseas buyers, increasing pressure on exporters.
The Singapore dollar has appreciated about 0.4% against the dollar since the beginning of the year.
Mr Wong acknowledged these trade-offs and said businesses need to consider currency appreciation alongside Singapore’s other operating costs.
“Companies looking to export will have to factor that into their cost of doing business, along with other costs they experience in Singapore. As we all know, Singapore is by no means the cheapest place in Southeast Asia,” he said.
singapore strategy
Still, Mr Wong argued that competing on price alone was not a viable strategy for Singapore, which instead needed to differentiate itself through its capabilities, stability and predictability.
“Companies aren’t looking for the cheapest location,” he says. “They want capability. They want stability. They want predictability.”
Mr Wong also said Singapore cannot compete on cost alone and is instead developing a broader industrial ecosystem that brings together multinationals, domestic suppliers, research capabilities and skilled workers.
Singapore’s competitiveness ultimately depends on the value it provides to businesses, rather than its relative cost advantage, he added.
“We have to play to our strengths again and compete based on the value we bring to the table,” he said.
