Hawkish MAS Stance Expected to Support Singapore Dollar

Analysts at MUFG anticipate the Monetary Authority of Singapore (MAS) will keep its exchange rate policy unchanged at the upcoming July review. The bank’s Lloyd Chan notes the central bank is likely to retain a tightening bias, drawing a distinction between energy-driven and domestically generated inflation.

Singapore’s robust economic growth and a positive output gap are cited as justification for maintaining a firm policy stance. This outlook supports the Singapore dollar in the near term as markets price in sustained hawkishness from the MAS.

The MAS manages monetary policy through the nominal effective exchange rate (NEER) rather than interest rates, making its stance directly relevant to the currency. A steady policy setting with a tightening inclination is seen as a tailwind for the SGD against major counterparts.