S’pore Prices Have ‘Little Effect’ On Brunei
By Hadthiah PD Hazair

Brunei-Muara - Singapore's concerns over soaring prices of goods and services do not present any possible significant impact on the Brunei economy for now, according to analysts interviewed by The Brunei Times. They did not, however, rule out the probability of the global currency markets volatility affecting both the Brunei and Singapore currencies.

The recent hike in Singapore's inflation rate has neither good nor bad consequences for the Brunei economy. The Brunei dollar is pegged to the Singapore dollar on an equal exchange rate.

Singapore's inflation rate, which recently hit a 25-year high, has little effect on the Brunei economy.

"The (Singapore dollar-US dollar) exchange rate has moved from around 1.56 to about 1.45... It's not good or bad news," said Tareq Muhmood, CEO of HSBC Brunei. "For some things, it's cheaper now for example, the export for certain industries are cheaper because of the weakening US dollar."

On inflation, or the level of price increases, Brunei has little to worry about Singapore's 4.2 per cent rate recorded in November last year. Vincent Cheong, CEO of the Brunei Economic Development Board (BEDB) said the government's subsidy on most items in Brunei equates to a more controlled inflation rate for Brunei.

"Your (Brunei's) basket of inflation is generally for food and household items... which is subsidised by the government. Brunei would probably be affected, but the impact would not be strong," Cheong said, adding inflation would probably only hit non-subsidised items, such as cars and computers.

In October 2006, the island state’s de facto central bank tightened monetary policy, allowing the Singapore dollar to rise, but faced the task of balancing the strong climb in inflation with the effects of any economic slump in the US.

HSBC's Muhmood told The Brunei Times yesterday that this year there would be an expected volatility across the foreign exchange market due to the lingering effects of US mortgage market woes. This, he said, might affect the Brunei and Singapore currencies as well.-- Courtesy of The Brunei Times

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