The Monetary Authority of Singapore (MAS) tightened policy by slightly raising the pace of appreciation in the Singapore Dollar (SGD) Nominal Effective Exchange Rate (NEER). The pace is estimated at 1.75% per annum, up from 1.5% previously, with the move aimed at inflation rather than growth.
As inflation eased towards the end of 2024, MAS lowered the appreciation pace twice, in January and April 2025. Headline and core inflation forecasts were revised higher in the latest update.
After the announcement, USD/SGD rose slightly to 1.2740. The SGD NEER is estimated to be near the strong end of its policy band, implying a USD/SGD range of 1.2600–1.3120 with a mid-point near 1.2850.
The Renminbi (CNY) is a near-term factor to watch because it is an important component of the SGD NEER. The SGD rose about 6% against the US dollar in 2025 and is up 0.9% so far this year, versus an average of -0.9% for Asian currencies excluding Japan.
The Monetary Authority of Singapore has tightened policy by increasing the pace of the Singapore dollar’s appreciation. This move is focused on controlling inflation, which has been a primary concern despite steady economic growth. We should therefore expect the SGD to remain on a strong footing in the weeks ahead.
This action was justified by recent data, as core inflation rose to 3.5% in February 2026, a significant jump from January’s figures. With Singapore’s advance estimates for first-quarter GDP growth coming in at a healthy 2.5%, the MAS has a clear runway to prioritize fighting inflation. This solid economic performance gives credibility to their hawkish policy shift.
For derivative traders, this suggests selling rallies in the USD/SGD pair. The currency pair is expected to trade within a 1.2600 to 1.3120 range, making strategies like selling out-of-the-money puts on USD/SGD with strikes near the 1.2600 level appealing. This approach benefits from both SGD strength and decreasing volatility.
This policy is a notable reversal from what we saw last year. In early 2025, the MAS slowed the pace of appreciation twice as inflation pressures were moderating at the time. The current move sends a clear signal that the central bank is proactive and will do more if necessary to manage rising prices.
We also have to consider the stability of the Chinese Renminbi, which is an important currency in the SGD trade-weighted basket. The People’s Bank of China has recently held the USD/CNY exchange rate steady, providing a stable backdrop for regional currencies. This external stability removes a major headwind and adds further support for the Singapore dollar.
