The Monetary Authority of Singapore has delivered a surprise policy tightening for the second consecutive meeting, increasing the appreciation slope of the Singapore Dollar’s Nominal Effective Exchange Rate band while maintaining the current width and center point. Commerzbank analysts note this unexpected move continues to apply upward pressure on the SGD, keeping currency pairs featuring the Singapore Dollar under sustained pressure.
The MAS operates a unique monetary policy framework that manages the SGD against a basket of major trading partner currencies rather than using conventional interest rates. By steepening the NEER appreciation slope, the central bank is signaling continued commitment to fighting inflation through currency strength. Traders should expect the SGD to remain supported against major currencies in the near term, particularly impacting USD/SGD to the downside and SGD crosses across Asian trading sessions.
FXnCO Insight
Position for continued SGD strength against regional peers as consecutive MAS tightenings signal aggressive inflation-fighting stance that will likely persist through the current monetary policy cycle.
Source: FXStreet