DBS Warns of Upside Risk for SGD Rates as USD Holds Firm

DBS Group Research economist Eugene Leow has highlighted building risks for the Singapore Dollar (SGD) in the near term. Despite the current flush liquidity environment, Leow warns that shorter-term SGD rates could face upward pressure. This comes as SGD rates have decoupled from USD rates, with spreads now stretched.

The economist also notes that Federal Reserve rate hike expectations remain sticky, and the USD continues to stay firm. The combination of domestic rate dynamics and external dollar strength may keep SGD under the spotlight. Markets will watch for further policy cues from both the Monetary Authority of Singapore and the Fed.