SOR headache for Singapore banks as rates enter negative territory; MAS defends stance
Profits at banks in Singapore issuing mortgages and loans based on SOR may be severely dented as the rate turned negative for the first time last week and is predicted to remain this way in the medium term
Major banks in Singapore issuing mortgages and loans linked to the Singapore dollar swap offer rate (SOR) could see a dip in profits as the SOR rate fell to –0.99% last week.
The outlook also remains negative in the medium term due to the Monetary Authority of Singapore's (MAS) policy to gradually appreciate its currency against a basket of currencies. It uses the SGD nominal effective exchange rate (NEER) to try to kerb inflation while also trying to discourage excessive inflows from US dollars
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