MAS only goes into the forex market to sell S$ to prevent S$ to
rise beyond the exchange rate band or MAS goes into the forex
market to buy S$ to prevent S$ to fall below the exchange rate
band.
MAS's role is to ensure a gradual change in the stability of S$
in view of the short-run and long-run conditions of the Singapore's
economy.
MAS does not go into the forex market for speculation.
Obviously the "market" has lost confidence in the Singapore economy
even as the MAS remain optimistically confident over the long term
and will do anything to support the Singapore Dollar to maintain
stability.
This will be a daily exercise that need substantial
Reserves to beat back the market speculators, who
are bent on taking positions that will shake the S$.
With the value of the S$ being weighted against a
basket of several currencies, which are from our major trading
partners, it will be quite remarkable for the MAS to come up with
such a loss in one year.
The loss is more astonishing when the value of
the S$ is supposed to have been kept stable over the
years - with movements within a controlled band - and the
market also aware of the determination of the Singapore Government
to defend the S$, which makes it a formidable currency to speculate
with (as was the case with the Thai Baht during the 1997 currency
meltdown in South-east Asia).
The air remains fishily salty.