SINGAPORE: The Monetary Authority of Singapore (MAS) said on Friday (Jun 24) that "Singapore’s interbank money markets continue to function in an orderly manner and its banking system remains sound", following the outcome of the UK’s referendum on EU membership.
Britain voted to leave the European Union, in a decision that sparked upheaval across Asian markets.
In response to media queries, the Singapore central bank said: "The liquidity positions of the major banks in Singapore are healthy, and overall banking system liquidity remains adequate. MAS will provide additional liquidity to the banking system if needed.
"The trade-weighted Singapore dollar remains within its policy band, notwithstanding heightened volatility in international foreign exchange markets today. MAS stands ready to curb excessive volatility in the Singapore dollar.
"We have been prepared for the market volatility. MAS had been in close contact over the past weeks with banks in Singapore, foreign central banks and regulators to take preparatory actions to ensure the resilience of our financial system and markets in the event of Brexit."
MAS added that it would continue to be vigilant and stay in close contact with fellow central banks and regulators, as uncertainty is likely to persist following the referendum outcome.
Meanwhile, deputy president and group chief investment officer of GIC Lim Chow Kiat said the Singapore sovereign wealth fund runs a "long-term and diversified portfolio" and is "prepared for a period of heightened market uncertainty".
"What's most important to us is that markets remain open," Mr Lim said.
MEDIUM- TO LONG-TERM IMPACT ON SINGAPORE "MODEST": MTI
A spokesperson from the Ministry of Trade and Industry (MTI) said while the immediate aftermath of Brexit has led to substantial uncertainty and volatility in the financial markets, it is "too early" to assess its full consequences.
"Based on analysts’ current estimates of the impact of Brexit on the UK and the Eurozone economies, MTI’s assessment is that the medium- to long-term direct impact of Brexit on the Singapore economy is likely to be modest," the spokesperson said.
The full impact of Brexit on the UK, the EU and the global economy will be heavily dependent on the UK’s subsequent trade arrangements with the EU and other markets, including Singapore, MTI said.
With Brexit, the UK is no longer covered by the existing trade agreements that the EU has, according to the trade ministry. This means it will need to negotiate new agreements with its trading partners, including Singapore.
However, the nature and precise timing of the negotiations will depend on when Brexit takes effect following the UK’s deliberations with the EU, stated the MTI spokesperson.
"We will continue to monitor the situation and assess the economic consequences of Brexit on the Singapore economy and our businesses," the spokesperson added.
SINGAPORE FIRMS IN UK COULD FACE SLOWER GROWTH: SCCCI
Responding to the Brexit vote, Singapore Chinese Chamber of Commerce and Industry (SCCCI) president Thomas Chua said in the immediate term, Singapore companies will face some uncertainties in terms of how Brexit will impact Asia. “Companies who are already in the UK may face the prospects of a slower growth,” he said.
Added Mr Chua: “For our SMEs who are suppliers to the UK MNCs based here, they will be affected if their UK principals become more cautious in their business plans due to a weaker British Pound. While the UK may traditionally be the first-choice hub of our companies to access the European market, they may now review UK as their preferred choice, and open to consider other options.
He noted that both Singapore and London are key financial centres in the world and with the uncertainties following Brexit, combined with the growth potential of Asia, Singapore may stand to benefit as more financial institutions may consider to set up here.
LONG-TERM IMPACT ON S'PORE 'HARD TO ASCERTAIN': SBF
Meanwhile, the Singapore Business Federation (SBF) expressed concern over the outcome of the vote.
“The decision to leave the EU adds more risk to Europe’s stability and to global markets at a time when the world economy needs more stability,” SBF said in a statement. “The possibility of a weaker EU, given its importance as a trading and investment partner to Singapore, will have significant impact on our economy.”
SBF also said the long-term impact of Brexit on Singapore and the world is “hard to ascertain”, although new configurations are currently being negotiated and put together, and the ripple effects of these “will take time” to work out and “add prolonged uncertainties”.