By Linette Lim | Posted: 30 January 2013 2105 hrs


An appreciating exchange rate will not be enough to fight inflation brought on by capital inflows, according to Ravi Menon, managing director of the Monetary Authority of Singapore.

Speaking at an investor conference, Mr Menon said central banks should adopt additional measures to ward off asset bubbles. These include tightening access to credit or imposing taxes to discourage speculation.

Low global interest rates and large capital inflows have spurred asset price accelerations in some Asian countries, especially in real estate markets.

As a result, Mr Menon said residential property prices in Korea, Taiwan, Hong Kong and Singapore have increased by 35 per cent on average since 2009. But nominal wages have risen by only 13 per cent.

Singapore does not have an overt interest rate policy and uses exchange rates to counter inflation.