Image Credits: Singapore Financial Sector, Marina Bay, Cegoh, Pixabay

Peterson Institute: Singapore’s currency manipulation derives primarily from its public pension system

“Singapore’s manipulation derives primarily from its public pension system, which collects high payroll taxes from workers and invests them entirely overseas through a sovereign wealth fund to back future pension obligations.”

This was noted by Peterson Institute for International Economics (PIIE; Peterson Institute) in itsCurrency Manipulation Update for 2015-17″ (3 April).

PIIE is a private and non-profit think tank focused on international economics, based in Washington, D.C. According to the 2015 Global Go To Think Tank Index Report (Think Tanks and Civil Societies Program, University of Pennsylvania), Peterson is number 20 (of 150) in the “Top Think Tanks Worldwide” and number 13 (of 60) in the “Top Think Tanks in the United States”.

Late Lee Kuan Yew, founding Prime Minister of Singapore was a director of the Institute.

According to Bergsten and Gagnon (2017), a country must meet all of the following criteria to be considered a currency manipulator in a given calendar year:

  1. the current account surplus exceeds 3 percent of GDP;
  2. net acquisitions of official foreign-currency assets (net official flows) exceed 2 percent of GDP;
  3. foreign exchange reserves and other official foreign assets exceed three months of imports;
  4. foreign exchange reserves and other official foreign assets exceed 100 percent of short-term external debt, public and private;
  5. net official flows exceed 65 percent of oil exports minus production cost;
  6. classification by the World Bank as a high-income or upper-middle-income country.

It wrote, “As a group, the financial centers are the largest and most consistent manipulators in recent years. In dollar terms, Switzerland had the world’s largest net official flows in 2016 and Singapore had the largest such flows in 2017.”

As a footnote, PIIE noted the government of Singapore includes the flows arising from its pension system in official flows, presumably because they are invested through a government-run fund that does not operate on strict market principles. “Indeed, it is highly unlikely that private investors would direct all of their saving into foreign assets, even in a relatively small economy.” wrote PIIE.


Table from PIIE. (Sources: International Monetary Fund Balance of Payments, International Financial Statistics, International Reserves, and World Economic Outlook databases; World Bank World Development Indicators database; Sovereign Wealth Fund Institute; national central banks and statistical agencies; and authors’ calculations.)

Singapore listed as a currency manipulator by PIIE since 2012

In a 2012 report by PIIE researchers, 22 countries were identified as currency manipulators over the 2001–11 period. Governments of these countries maintained trade (current account) surpluses by holding down the values of their currencies through excessive purchases of foreign assets.

The trend was observed in a 2013 update to the list of countries.