Commerzbank’s Charlie Lay and Moses Lim note that Monetary Authority of Singapore (MAS) has tightened policy by slightly increasing the pace of Singapore Dollar (SGD) Nominal Effective Exchange Rate (NEER) appreciation, focusing on inflation rather than growth. They highlight that headline and core inflation forecasts were revised higher and that SGD NEER is estimated near the strong end of the band, implying a USD/SGD range of 1.2600–1.3120 around a 1.2850 mid-point.

MAS shift keeps SGD on firm footing

"MAS tightened policy by slightly increasing the pace of appreciation of the SGD NEER. We estimate that it is adjusted to 1.75% pa vs 1.5% previously. As inflation moderated towards the end of 2024, MAS lowered the pace of appreciation twice, in January and April 2025."

"USD/SGD ticked up slightly to 1.2740 after the MAS announcement. This may seem counter-intuitive, but the modest tightening was largely priced in, and it was probably a case of profit taking after the fact. Apart from the USD and the broad risk backdrop, the Renminbi (CNY) will be the other key factor to watch near term."

"Signals of a stable CNY ahead of the Trump-Xi summit could help to stabilize SGD given that CNY is an important component in the SGD NEER. SGD gained around 6% vs USD in 2025 and is up 0.9% so far this year compared to the average for Asian currencies ex-Japan of -0.9%."

"It [MAS] sends the signal that it is acting to curtail inflation pressure. It will do more if necessary, provided that growth is not severely affected."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)