Money market behavior in Singapore can be affected by a lot of economic factors. Singapore money market often called Singapore Interbank Offered Rate (SIBOR). Monetary policy was the first factor that can affect SIBOR. Monetary Authority of Singapore has a duty to promote the stability of price that will support Singapore’s economic growth (Monetary Authority of Singapore 2012). Then, the next factors that affect SIBOR were the strength of Singapore Dollars and the level of inflation (Appendix 1). We will explain about the Singapore money market rates behavior over the past three years (2010, 2011, and 2012) and we will try to predict it over the six months.
At the end of 2010, Singapore money market had …show more content…
In our opinion, Singapore government will be pushed to do this strategy to attract new customers; hence there will be an increase in money supply and in contrast a decrease in interest rate.
However, the economic condition in Europe is still not stable as a result of the recession recently that lead to financial stress. The crisis affects most of the world including Asia. As a county with the highest rate of business activities among countries in South East Asia, Singapore also affected by crisis in Europe. Europe crisis lead to some condition such as tightening credit condition, and in the United State, it is predicted that private consumption will be low. As the demand in economy is reduced, there is excess is supply which causes economy surplus. As a result, the global market is slowing down and this also happened to Singapore. Before the crisis in the first half of 2013, Singapore has GDP of 4.2% which is a good sign of economy growth. However, in the next second half of the year, after the crisis, this growth in GDP is slowing down until early 2013. The whole economy is gradually declined and most of business in major countries does not do well.
Based on our observation, we made prediction for the next 6 months. We expected that by the end of 2013, Singapore GDP growth will fall from 4.409% to 4.295%. However these figures are only the annual percentage of constant price GDP, the real GDP is forecasted to rise to SGD 325,866