Hi buddies, what's the impact of Singapore depreciating SGD to boost export?
Since many MNC has shifted their support services offshore, and factories are moving out due to high cost; does lowing currency help to make the loca l economy more competitive?
This is currency manipulation. I think this is best left as a tool to manage inflation rather than artificially managed competitiveness which will b ea downward spiral.
Actually currency depreciation does work to increase exports and tourism. Most of the economic rebound from crisis is from such mechanism
But we all know there is no such thing as free lunch. The lunch money is actually taken from the populace ie the people are subsidising the exporters. Singapore on the other hand has a currency appreciating policy to manage inflation. It is no coincidence that our GDP per cap is top 3 in the world in US$ terms
So policy makers have to consider whether they looking for short term fix or longer term structural changes. But sometimes the former is needed to usher in the latter.