Tharman Shanmugaratnam said on CNN's Fareed Zakaria GPS that at the height of the financial panic in 2008, it made sense for China to halt the yuan's appreciation. Now, it was in the country's own best interest to let the currency rise, he said.
The exchange rate was an anchor of stability at a time when there was instability all around the place, he said. Should they now go back to where they were before the crisis, which is the path of gradual appreciation with a more flexible exchange rate allowed? I think that's sensible.
The interview is scheduled to air on Sunday. CNN provided an advance transcript.
Singapore joins the United States, Europe, the International Monetary Fund and others in prodding China to allow its currency to rise more rapidly.
China has heard this argument for years, particularly from Western countries that say its undervalued currency gives it an unfair trade advantage.
In recent months, however, the tone has shifted. Instead of pressuring China to change its policy in order to help the rest of the world, policymakers have pointed out that it would be in China's best interest.
Shanmugaratnam said inflation was going to become an increasing concern in China, so allowing the currency to rise more swiftly would help alleviate price pressures.
He also said revaluing the currency would help lift living standards.
As you grow, as your productivity goes up, if you want people to be able to enjoy your higher standard of living by consuming more, it goes with a stronger exchange rate, he said.
(Reporting by Emily Kaiser; Editing by Eric Walsh)