Singapore's Currency Gets a Fresh Lift as Its Central Bank Tightens for a Second Straight Round The Monetary Authority of Singapore has again nudged up the pace of the Singapore Dollar's appreciation, its second consecutive tightening, keeping the currency supported against the US Dollar. MUFG's Lloyd Chan expects USD/SGD to trend lower over the medium term. Singapore's currency looks set to hold its ground against the US Dollar after the city state's central bank surprised markets with a second straight round of policy tightening, according to a currency assessment from MUFG's Lloyd Chan. The move, though small in size, sends a clear signal that policymakers are still watching inflation closely and believe the economy is sturdy enough to take a little more pressure. A second tightening in a row The Monetary Authority of Singapore (MAS) runs monetary policy differently from most central banks. Rather than setting an interest rate, it steers the Singapore Dollar against a basket of trading-partner currencies, a mechanism known as the Singapore Dollar Nominal Effective Exchange Rate, or S$NEER. By adjusting the slope, width and centre of the band the currency is allowed to move within, MAS effectively tightens or loosens policy. This time it steepened the slope, letting the currency appreciate a touch faster, while leaving the width and the centre of the band exactly where they were. Chan estimates the slope has been raised by 25 basis points, to 1.25% per annum. What caught markets off guard was the timing. This was the second consecutive tightening, and MAS went out of its way to describe the adjustment as smaller than the one it delivered in April. That wording matters: it tells investors that while the central bank felt some tightening was justified, it wants only a measured, restrained response for now rather than an aggressive one. Why the move is bigger than it looks "While the magnitude of the move was modest, the decision itself is significant," Chan said. The importance lies in what the step reveals about MAS's thinking. Coming so soon after an earlier tightening, it confirms that the central bank is growing more concerned about how long imported inflation pressures may linger. Just as tellingly, it signals confidence that Singapore's economy remains strong enough to absorb further tightening without being knocked off course. Home-grown inflation still under control The restraint in the size of the move is no accident. Domestic price pressures, Chan notes, remain contained. Growth in unit labour costs continues to cool, gains in productivity are still healthy, and there is little sign of broad-based second-round effects, the situation where an initial jump in prices feeds into wages and then loops back into prices again. Because those home-grown pressures are behaving, MAS could afford to keep its response deliberately small and aimed squarely at the imported side of the inflation story. The road ahead for USD/SGD Taken together, the hawkish but measured stance should keep the Singapore Dollar well supported, even against a backdrop of global uncertainty and elevated US yields, both of which normally favour the greenback. Chan expects USD/SGD to drift lower over the medium term, meaning the Singapore Dollar strengthens against its US counterpart. The main risk to that view sits outside Singapore itself: the behaviour of the US Dollar, driven by external forces, is the key wildcard that could upset the trajectory. The wider currency picture The Singapore Dollar's steadiness comes as other major pairs swing on global headlines. The British Pound handed back Friday's small gain and slipped under the 1.3300 mark on Monday to reach fresh multi-week lows. Softer crude oil prices, following a pause in the Middle East conflict, together with a recent weak UK inflation reading, are working against any prospect of tighter policy from the Bank of England before its meeting later in the week. The Euro, meanwhile, faded after an early push above 1.1400, easing back toward the 1.1370 area on Monday. Even so, EUR/USD snapped a two-day losing run, helped by the indecisive tone in the US Dollar as investors keep a close eye on the Middle East. Next on the calendar is the US Consumer Confidence reading from the Conference Board. What this means for you • For currency traders: The hawkish tilt points to USD/SGD trending lower over the medium term, giving those positioning in the pair a directional cue, though swings in the US Dollar remain the big risk. • For travellers and remitters: A stronger Singapore Dollar means it can cost a little more to buy, affecting anyone heading to Singapore or sending money there. Questions & Answers 1. What exactly did MAS do? It slightly increased the rate of the Singapore Dollar's appreciation, raising the slope of the S$NEER band, in its second consecutive tightening. 2. How much was the slope raised? The slope is estimated to have increased by 25 basis points, to 1.25% per annum. 3. Did MAS change the band's width or centre? No, MAS left the width and the centre of the band unchanged and only steepened the slope. 4. How did this move compare with April? MAS explicitly described the adjustment as smaller than the move in April, signalling a measured response. 5. Why did MAS tighten only modestly? Because domestic inflation pressures remain contained, unit labour cost growth is moderating and there is little sign of broad-based second-round effects. 6. What is the outlook for USD/SGD? Lloyd Chan expects USD/SGD to trend lower over the medium term, meaning the Singapore Dollar strengthens against the US Dollar. 7. What is the biggest risk to that outlook? External US Dollar dynamics, driven by forces outside Singapore, are the key risk to the forecast. 8. What is happening with the Pound and the Euro? The Pound slipped below 1.3300 to multi-week lows on Monday, while the Euro faded from above 1.1400 back toward the 1.1370 area. https://trendkia.com/en/market/singapore-ke-kendriya-bainka-ne-lagatara-dusari-bara-kasi-niti-majabuta-bana-rahega-singapore-dolara-11161 TrendKia — Har trend, sabse pehle.