Predetermined short-term outflows (foreign exchange swaps
, central bank liabilities) not included in the above total amounted to a further $7bn.
Monetary operations of the BSP refer to the buying or selling of government securities, lending or borrowing against underlying assets as collateral, acceptance of fixed-term deposits, foreign exchange swaps
, and the use of other monetary instruments of the central bank aimed at influencing the underlying demand and supply conditions.
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Aside from term deposits, the BSP conducts other OMO such as foreign exchange swaps
, reverse repurchase transactions, and outright purchases and sale of securities.
Foreign exchange swaps
made up the largest traded foreign exchange product class in Singapore and accounted for 48%4 of all trades, followed by spot (24%4) and FX forwards (20%4).
The Bank can also use foreign exchange swaps
to inject or withdraw cash from the banking system, although these transactions are done outside the OMO.
FX benchmark rates, such as the WM/R Rates, are used for pricing of cross-currency swaps, foreign exchange swaps
, spot transactions, forwards, options, futures and other financial derivative instruments.
They hiked their interest rates, they took measures to tighten liquidity, they intervened in the market, they provide foreign exchange swaps
, they provide hedging against foreign currency risks.
Most notably, Switzerland did so before 1998 through foreign exchange swaps
, a technique explained below (AR 2009, p.
The value of the trades--which included interest rate swaps, credit default swaps, foreign exchange swaps
, and commodity derivatives--totaled more than $6 billion.