Singapore’s Wong Rejects Weaker Currency as Competitiveness Strategy

Singapore Prime Minister Lawrence Wong rejected weakening the Singapore dollar to improve competitiveness, saying the country must rely on economic capabilities, stability and predictability despite its high business costs.

Wong made the remarks Oct. 12 at DBS’ Asia Future Forward Conference in Singapore. He said the Monetary Authority of Singapore would continue managing monetary policy independently and that the currency would reflect the country’s economic fundamentals.

“If the economy does well, then we can continue to expect a strong, stable Sing dollar that is anchored on fundamentals and will also help keep imported inflation down,” Wong said.

Singapore manages the Singapore dollar against a basket of currencies linked to its major trading partners. The currency is allowed to move within an undisclosed policy band, an approach that reflects the city-state’s dependence on international trade and imports.

A stronger Singapore dollar can reduce the local cost of imported goods and services, particularly when global inflation is elevated. It can also make Singapore-produced goods and services more expensive for overseas buyers, putting pressure on exporters.

The Singapore dollar has strengthened almost 0.4% against the U.S. dollar since the beginning of the year. Wong acknowledged that exporters would need to account for the currency’s strength along with Singapore’s other business costs.

“Companies that seek to export will have to factor that into the cost of doing business, together with the other costs that they experience in Singapore, as we all know, we are certainly not the cheapest location in Southeast Asia,” Wong said.

Wong said competing mainly on price was not a viable strategy for Singapore. Instead, he said the country was developing broader industrial ecosystems that connect multinational corporations, domestic suppliers, research capabilities and skilled workers.

“Companies are not looking for the cheapest locations,” Wong said. “They are looking for capabilities. They are looking for stability. They are looking for predictability.”

Singapore’s competitiveness, he said, would depend on the value it offers businesses rather than on a lower relative cost.