Singapore’s 2026 Budget outlines measures that focus on supply-side support, SME internationalisation, and capital market development. It includes new funding for the Equity Market Development Programme and the Anchor Fund. In FX markets, USD/SGD was little changed at 1.2630. The pair is close to a 10-year low of 1.2580. The Singapore dollar has outperformed most Asian peers this year. Year-to-date, SGD is up 1.8% against the US dollar. Within Asia, SGD is the second-best performing currency behind MYR (+4.0%), with THB up +1.9%. The Straits Times Index has reached record highs. The article was produced using an Artificial Intelligence tool and reviewed by an editor. The 2026 Budget offers solid fundamental support for the Singapore dollar. It focuses on policies that improve competitiveness and attract capital. This supports the current trend of SGD strength, which has already made it one of Asia’s top performers this year. Overall, the rally appears well supported. With USD/SGD testing a key decade-low area near 1.2580, traders may want to prepare for a possible break lower. Options data shows rising demand for USD puts. This suggests the market expects more SGD strength in the near term. Strategies that benefit from a move toward the 1.24 level could do well. This setup is similar to mid-2025, when government efforts to attract tech investment were followed by a sharp drop in USD/SGD. The Monetary Authority of Singapore has often acted early, and a pro-growth budget may give it room to keep a strong-currency stance. Traders who were short SGD in 2025 may be hesitant to bet against this move again. Beyond FX, record highs in the Straits Times Index point to broader confidence. The index was supported by S$1.5 billion in foreign inflows last month alone. The budget’s targeted funding for capital market development could add to this momentum. Selling out-of-the-money put options on the index may be one way to collect premium while aligning with the positive sentiment. SGD implied volatility has been trending lower and recently hit a six-month low. Lower volatility, together with a favourable interest rate differential versus the US dollar, can make SGD attractive for carry trades. Traders may continue borrowing in USD to buy SGD to capture both the rate spread and potential FX gains.

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