Singapore by foreign participation, the government has

Singapore is located in the heart of Asia and
provides global investors access to the Asia Pacific market. The
well-structured business infrastructure and global connectivity and trade
enable global investors to access to a strong Asian market with over 4 billion
people within the radius of 7 hours’ flight time. Today, there are over 200
banks that have chosen Singapore as their operational headquarters. In 2013,
the total asset size has reached $2 trillion. These assets are critical for the
financial system and the local and regional growth in facilitating trade,
corporate finance and the building of infrastructure. The pro-business and the
effective regulatory environment has made Singapore as the financial center in
Asia (Monetary Authority of Singapore,

In order to protect the domestic economy from
offshore tax havens and overcapacity by foreign participation, the government
has separated and implemented policies in order to control these activities. Singapore
has established the Asian dollar market in 1968, the counterpart of the
Euro/USD market. The purpose of its creation was to separate offshore banking
services from the domestic financial sector. The creation of the Singapore
dollar makes it more difficult for speculators to sell and short the Singapore
dollar against the US dollar in the foreign-exchange (FX) market. By shorting
the Singapore dollar, speculators are betting on a decline in the value of the
Singapore dollar (Strait Times, 1985). The Monetary
Authority of Singapore can raise the interest rate and thereby provide
short-term liquidity in the domestic banking sector. Speculators are therefore
forced to cover and buy back their FX position since the value of Singapore
dollar has been strengthened against the US dollar. This monetary and non-internationalization
policy illustrates the possibility of success of interest rate hike in
Singapore. Singapore is ranked the third largest FX center globally and the
largest FX center in Asia Pacific by turnover (Monetary Authority of Singapore,

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The hike in the Singapore interest rate has
provided security and liquidity in the bond market. The government surpluses
offer investors attractive fixed income and a range of investment
opportunities. The Singapore Exchange offers bond investors with a low minimum
subscription size (Monetary Authority of Singapore,


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