USD/SGD: Neutral SGD NEER slope to dampen Singapore dollar gains – MUFG

During 2020 the Singapore dollar strengthened against the US dollar from 1.3453 to 1.3211.

According to economists at MUFG Bank, neutral SGD NEER policy is likely to be maintained which should dampen Singapore dollar gains.

Key quotes

“The Singapore dollar’s modest appreciation despite the sharp decline in the dollar in 2020 reflected the impact of MAS’ neutral SGD NEER policy set in response to the COVID-19 shock. This neutral policy will set the tone for USD/SGD trading for the whole of 2021, setting constraints for Singapore dollar gains despite extended dollar weakness and potential improvements in current account surpluses. Further monetary easing is unlikely this year as fiscal policy is doing the heavy lifting.”

“Spillover effects from last year’s massive fiscal spending around 20% of GDP will continue to shore up economic growth in 2021. This, along with low base effects, should result in an economic rebound in 2021 with government estimates between 4.0-6.0% from 2020’s 5.8% contraction – the largest annual decline postindependence in 1965. External demand is expected to improve in 2021, thereby leading to wider current account surpluses after Q1-3 2020’s 14.5% YoY decline.” 

“Domestic activity is expected to improve with inoculation underway since end-December and social distancing restrictions were eased further starting on December 28. Singapore started vaccination end-2020, and all residing in Singapore is expected to be vaccinated by end-Q3 2021.”


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

How do emotions affect trade?
Follow up our daily analysts guidance

Subscribe Today!    

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD: Focus on two-month-old support near 1.1750

EUR/USD remains pressured around three-week lows, consolidate the biggest daily fall in a month. Firmer Momentum back-up to the south-run, 50-DMA break favor sellers.


GBP/USD: Bulls and bears will battle this out near the 61.8% golden ratio

The GBP/USD price has corrected 50% of the hourly bearish impulse. The bulls have been chipping away as profits are taken with bears moving aside one by one. This has resulted in a slow decelerating correction from which could attract sellers again. 


EUR/USD: Focus on two-month-old support near 1.1750

EUR/USD remains pressured around three-week lows, consolidate the biggest daily fall in a month. Firmer Momentum back-up to the south-run, 50-DMA break favor sellers.


Ethereum Classic Price Prediction: ETC coils up for 40% upswing

Ethereum Classic price shows choppy action as it approaches the lower trendline of an ascending parallel channel. The $52.92 support floor is likely to be tagged before a 40% upswing originates.

Read more

US Michigan Consumer Sentiment Preview: Markets will have to look hard for positive signs

Consumer outlook expected to rebound to 72.2 in September. August’s 70.2 was the lowest since December 2011. Inflation and Delta variant wearing on US optimism. Markets face negative dollar risk from fading consumer optimism.

Read more