ANCHOR OF ECONOMIC

AND FINANCIAL STABILITY

MANAGEMENT OF OFFICIAL FOREIGN RESERVES
INVESTMENT PERFORMANCE

Chart 4 shows the investment performance of the OFR for the last five financial years. The gains/losses of OFR, as represented by the gold bars in Chart 4, comprise two separate components - investment gains/losses (blue bars) and currency translation effects (grey bars). Holding the SGD exchange rate constant to strip out currency translation effects, the OFR recorded an investment gain of S$5.2 billion in FY 2015/16. As in previous years, the investment gain was mainly from interest income and realised capital gains from the sale of OFR assets. The investment gain was, however, lower compared to prior years due to higher valuation provisions. The increase in provisions was due mainly to the market values of some equity securities in MAS' portfolio falling below cost, as global equity markets declined in FY 2015/16.

In FY 2015/16, the currency translation effect was negative due primarily to the strengthening of the SGD against the USD and the GBP. The exchange rate movements of the SGD against the G4 currencies for the last five financial years are shown in Table 1.

Taking the investment gains/losses together with the currency translation effects, MAS' annual gains/losses3 from OFR over the last five financial years ranged from -S$10.1 billion to S$16.5 billion.


 

3 Gross of investment, interest and other expenses.
4 Positive figures represent an appreciation of the SGD, while negative figures represent a depreciation of the SGD against the foreign currency over the financial year.