TY  - JOUR
AU  - Kapur, Basant K
TI  - Capital Flows and Exchange Rate Volatility: Singapore's Experience
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11369
PY  - 2005
Y2  - May 2005
DO  - 10.3386/w11369
UR  - http://www.nber.org/papers/w11369
L1  - http://www.nber.org/papers/w11369.pdf
N1  - Author contact info:
Basant Kapur
National University of Singapore
E-Mail: ecskapur@nus.edu.sg
M1  - published as Basant K. Kapur. "Capital Flows and Exchange Rate Volatility: Singapore's Experience," in Sebastian Edwards, editor, "Capital Controls and Capital Flows in Emerging Economies: Policies, Practices, and Consequences" University of Chicago Press (2007)

AB  - Singapore%u2019s experience with international capital flows over the past two decades or so has been a rather %u2013 although not completely %u2013 benign one, owing to strong fundamentals and generally well-conceived macro-economic policies. We begin by briefly discussing the experience in 1998 of Hong Kong, another city-state with a well-developed banking system and equities market, and operating on a Currency Board (CB) system (although with some differences from Singapore%u2019s CB system). The discussion serves to identify some %u2018areas of vulnerability%u2019 in the Hong Kong set-up at that time. We next discuss Singapore%u2019s policy background and early experience, and in the light of Hong Kong%u2019s experience are better able to appreciate how Singapore%u2019s policy framework served to circumvent or minimize important vulnerabilities.  Particular attention is paid to Singapore%u2019s exchange-rate policy and its policy of non-internationalization of the Singapore dollar. Equity- and currency- market interactions are also considered. We next show how Singapore emerged relatively unscathed from the 1997 Asian Crisis. Lastly, we discuss Singapore%u2019s debt markets, and show how under the imperative of promoting the development of its bond markets the non-internationalization policy has been progressively relaxed, while retaining key safeguards.
ER  -