Singapore Dollar: Firm NEER with mild upside against US Dollar – OCBC

OCBC’s FX Strategist Sim Moh Siong expects the Singapore Dollar (SGD) Nominal Effective Exchange Rate (NEER) to trade 1.5–2% above midpoint, supported by de-dollarisation and safe-haven flows, even as reduced carry tempers its appeal. With Monetary Authority of Singapore (MAS) having tightened in April and further tightening possible later in 2026, Siong projects USD/SGD to drift moderately lower toward 1.26 by year-end while the pair largely tracks overall USD direction.

Policy support underpins Singapore Dollar

"We expect the SGD NEER to hold firm within the policy band, trading about 1.5 to 2 percent above the midpoint. Support from de-dollarisation and safe-haven flows should persist, though reduced carry limits the SGD’s appeal."

"With further SGD gains capped by the band, USD/SGD will largely track USD direction. We are neutral on the USD near term and expect it to stay firm but rangebound."

"MAS tightened policy slightly in April. Elevated oil prices keep inflation risks alive and support expectations for further tightening. However, a back-to-back slope increase in July looks less urgent after the April core CPI undershoot."

"Growth signals are mixed. 1Q26 GDP surprised on the upside, but MTI highlighted significantly higher downside risks from the Iran conflict. The outlook is therefore less certain despite strong recent data. "

"We see scope for USD/SGD to moderately drift lower toward 1.26 by year-end, especially if MAS delivers additional tightening later this year."

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