Response to "Structural Cracks" (The Economist, 24 May 2008)
"Structural cracks" (May 24th) contains references to Singapore that are factually incorrect. First, the Singapore dollar is managed against a trade-weighted basket of currencies of our major trading partners, and is neither managed nor pegged (as is the case in the Hong Kong SAR) to the US dollar. The trade-weighted Singapore dollar is allowed to fluctuate within a policy band that is consistent with economic fundamentals, with the aim of achieving sustained non-inflationary growth over the medium term. This has been our monetary policy framework since 1981. Second, in choosing the exchange rate as the intermediate target of monetary policy - in the context of completely free capital mobility in and out of Singapore - domestic interest rates are determined by market forces and not a result of discretionary policy actions.
Angelina Fernandez Director (Communications) Monetary Authority of Singapore