MUFG Bank suggests that the Singapore Dollar could strengthen due to improved market sentiment.

    by VT Markets
    /
    Jan 27, 2026
    MUFG Bank is optimistic about the Singapore Dollar (SGD). The currency is gaining strength thanks to improved feelings about the Chinese Yuan (CNY) and a weaker US Dollar (USD). The SGD is currently at an important technical level. It could rise to the 1.260-1.2650 range if the US Dollar Index (DXY) keeps falling. Also, steady inflation rates are helping the currency strengthen.

    Inflation and Currency Assessment

    In Singapore, both headline and core inflation stayed at 1.2% year-on-year in December. This steady inflation indicates a possible bottoming out, boosting positive sentiment for the Singapore Dollar. The future looks good for the Singapore Dollar, mainly due to a weaker US Dollar and better feelings about the Chinese economy. The US Dollar Index (DXY) recently dropped below 102.00, the lowest point since last summer, after weaker US job data. China’s industrial production in December 2025 also exceeded expectations, supporting regional currencies. In Singapore, inflation seems to have stabilized, with headline and core inflation maintaining at 1.2% in December 2025. This stability allows the Monetary Authority of Singapore to stick to its policy, which generally supports a strong currency. The USD/SGD pair is at a crucial point and may range between 1.2600 to 1.2650.

    Strategic Considerations for Traders

    This marks a significant change from earlier trends in 2025 when worries about global growth pushed the USD/SGD pair to around 1.38. The current downward trend appears more consistent compared to temporary drops last year. Breaking important support levels indicates new momentum for the Singapore Dollar. Given this outlook, traders might want to buy USD/SGD put options to benefit from a stronger Singapore Dollar. A strategy targeting strikes near the 1.2700 level with expiries in February or March 2026 would capture expected movements over the next few weeks. This approach offers a straightforward plan to profit from the potential decline in the currency pair. Create your live VT Markets account and start trading now.

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