Singapore Dollar: MAS tightening expectations support resilience – OCBC
OCBC’s Christopher Wong observes that Singapore Dollar (SGD) has held relatively steady despite softer Asian FX, with USD/SGD around 1.2780.
Christopher Wong from OCBC notes that the Singapore Dollar (SGD) has maintained a relatively stable position, with USD/SGD trading around 1.2780, despite softer Asian currency markets. Strong manufacturing output and consistent price pressures suggest that the Monetary Authority of Singapore (MAS) may slightly steepen the S$ Nominal Effective Exchange Rate Index (S$NEER) slope during their mid-October meeting.
August manufacturing output increased by 15.4% year-over-year, following a revised 6.9% in July, driven by robust gains in electronics and precision engineering, although output declined by 0.5% month-over-month. The resilient activity is attributed to AI-related demand. After the recent Consumer Price Index (CPI) data, OCBC anticipates MAS to further steepen the S$NEER slope in the upcoming Monetary Policy Committee (MPC) meeting.
In the short term, the SGD is expected to follow USD/rate movements and RMB developments, while the expectation of additional MAS tightening should maintain its relative resilience compared to higher-beta Asian currencies. USD/SGD closed at 1.2777. While bullish momentum persists on the daily chart, there are early indications of slowing momentum, and the Relative Strength Index (RSI) hints at easing. Expectation of consolidation is likely.
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