Exchange rate effects on sectoral investment in Singapore manufacturing industries

• Main Author: Foo, Sey Yuen
• Other Authors: Nanyang Business School
• Format: Theses and Dissertations
• Language: English
• Published: 2008
• Subjects: DRNTU::Business::Finance::Foreign exchange
• Online Access: http://hdl.handle.net/10356/7261
• Institution: Nanyang Technological University

This paper looks at the exchange rate effects on investments of Singapore manufacturing industries through the profitability channel. It is generally postulated that when domestic exchange rate depreciates, the price-competitiveness of the local producers' output will improve. This leads to an increase in expected profitability, and hence investments. At the same time however, the depreciation causes imported inputs to become dearer to the producers. The net effect is therefore ambiguous, depending on which effect dominates.