Singapore Dollar: MAS stance keeps SGD defensive – MUFG

Lloyd Chan at MUFG views Singapore Dollar (SGD) as relatively defensive versus other ASEAN currencies thanks to Monetary Authority of Singapore's (MAS) tight Singapore Dollar Nominal Effective Exchange Rate (S$NEER) policy, which anchors volatility and inflation expectations. However, Chan still expects modest SGD weakness against the US Dollar (USD) as rate differentials widen, and anticipates MAS will leave its tight stance unchanged at the July meeting.

Singapore dollar seen relatively resilient

"SGD remains comparatively defensive under the MAS S$NEER framework, which dampens FX volatility and inflation expectations, but it is still likely to weaken modestly against the USD due to widening rates differentials in favour of the dollar."

"Overall strategy remains USD-positive against selective ASEAN FX in the near term, particularly THB, MYR, and IDR, while favouring SGD on a relative basis given MAS tight S$NEER policy stance."

"We expect MAS to keep its tight policy stance unchanged at the July meeting, as resilient growth will likely allow the central bank to lean against inflation risks."

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