OCBC’s FX Strategist Sim Moh Siong anticipates the Singapore Dollar (SGD) Nominal Effective Exchange Rate (NEER) will remain firm, trading 1.5–2% above its policy band midpoint, supported by ongoing de-dollarisation and safe-haven flows, despite reduced carry limiting its appeal [1]. The Monetary Authority of Singapore (MAS) tightened policy in April, and elevated oil prices are keeping inflation risks alive, which supports expectations for further tightening later in 2026 [1]. However, a consecutive slope increase in July appears less urgent following an undershoot in April's core CPI [1].
Sim Moh Siong projects the USD/SGD pair to drift moderately lower toward 1.26 by year-end, largely tracking the overall direction of the US Dollar [1]. OCBC maintains a neutral stance on the USD in the near term, expecting it to remain firm but rangebound [1]. While further SGD gains are capped by the policy band, additional MAS tightening could provide scope for further appreciation [1].
Growth signals for Singapore are mixed, with 1Q26 GDP surprising on the upside, but the Ministry of Trade and Industry (MTI) has highlighted significantly higher downside risks stemming from the Iran conflict, making the outlook less certain despite strong recent data [1].
Overall, policy support and safe-haven flows are expected to underpin the SGD, but market participants should be aware of the limited upside due to reduced carry and the uncertain growth outlook [1].
CONCLUSION
OCBC expects the Singapore Dollar to remain firm within its policy band, supported by de-dollarisation and safe-haven flows, with potential for moderate appreciation if MAS tightens further. However, mixed growth signals and inflation risks temper the outlook. Market participants should anticipate a rangebound USD/SGD, with limited upside for the SGD.