Singapore increases its gold reserves for the first time in decades

Singapore increased its gold reserves by about 20% earlier this year in a largely under-the-radar move that saw holdings expand for the first time in decades.

According to data from the Monetary Authority of Singapore’s (MAS) International Reserves and Foreign Currency Liquidity reports, the purchases were made over May and June this year, totaling about 26.3 tonnes. The move came to wider prominence when it was picked up in the International Monetary Fund’s monthly update, which shows it was the first increase in figures dating back to 2000.

MAS didn’t disclose how much it paid for the bullion, but at today’s price that would be about $1.5 billion.  The central bank may have preferred to not draw attention to the amount of gold in its international reserves as this might encourage foreign-exchange markets to view the purchase as a move that strengthens the city-state’s reserve position and potentially put upward pressure on it’s exchange rate. 

“The change in gold holdings is a result of the continuous and ongoing efforts by MAS to ensure that the official foreign reserves (OFR) portfolio remains well-diversified and resilient through economic and market conditions,” an MAS spokesman said. “The change is a modest step in relation to the overall size of the OFR portfolio.”

After sitting on the sidelines for much of last year, central bank appetite for gold has resumed, in part due to inflationary pressures globally along with disruptions in the energy market, FXStreet said in a report on 11 November this year. Gold is seen as a long-term hedge against inflation risk.

The central banks of Serbia, Hungary, Thailand, France, Germany and Brazil have also added gold to their reserves in recent months, said the report. Russia, which built up its gold holdings to well over 20 per cent of its reserves, is now ranked fifth in the world for the size of its gold reserves, the report added.

The heavy gold accumulation by central banks points to an ongoing shift away from the US Federal Reserve Note “dollar” as the global reserve currency of choice and points to the ongoing shift in global economic dynamics, said the FXStreet report.

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