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SINGAPORE: The Monetary Authority of Singapore or MAS has posted a record net profit of S$10.12 billion for its fiscal year ended 31 March 2010.
This overturns a loss of S$9.2 billion a year before.
Speaking at MAS' annual report news conference on Thursday, Managing Director Heng Swee Keat said the improvement was due to the effects from a stronger Sing dollar, interest and dividend income, as well as gains in the valuation of assets.
These came with stronger economic growth.
But MAS believes the pace of growth in the first six months may not sustain in the second half.
"Growth is likely to have peaked at the middle of the year, and will moderate to a more sustainable rate, as external demand slows after the post-crisis bounce from stimulus measures and inventory effects wane worldwide," said MAS' MD
MAS expects inflation to rise in the second half, on higher car and commodity prices.
But increases in consumer prices are likely to range between 2.5 and 3.5 per cent.
MAS said property prices are not likely to significantly affect near term inflation.
Mr Heng said that measures have also been taken to cool the the property market. These included the withdrawal of the interest absorption scheme and lowering the loan-to-value ratio to 80 per cent. MAS will also ensure that banks remain prudent in their lending.
Food prices, however, may trend up.
Song Seng Wun, a regional economist at CIMB said: "We've got droughts in parts of Asia, but we also have flooding in other parts as well. Perhaps there may be an issue of supply disruption causing the prices of meat or vegetables rising. Prices are coming up but no where near the peak of 2008."
MAS said its current monetary policy stance, tightened in April, remains appropriate to contain inflationary pressures.
The central bank will also issue short-term bills in the second quarter of 2011 to help bank liquidity.
The MAS Bills will be phased in gradually, with an initial sum of up to $20 billion.
Banks can sell them or pledge them as collateral.
Observers said the introduction of the MAS Bills will help to deepen the capital markets and provide financial institutions more flexibility in managing liquidity.
The bills will also offer another safe avenue for the banks to park their cash, especially during the period where liquidity is plentiful.
The central bank will also enhance the standing facility which is the key liquidity facility for the banks.
With immediate effect, MAS will accept Singdollar debt securities issued by AAA-rated and zero-weighted public sector entities. - CNA/jm/ls
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