Commerzbank analysts highlight that the Monetary Authority of Singapore (MAS) unexpectedly tightened policy for a second straight meeting, slightly increasing the Singapore Dollar (SGD) Nominal Effective Exchange Rate (NEER) slope while leaving the band’s centre and width unchanged. The move signals greater concern over inflation risks despite benign data and softer energy prices. USD/SGD dipped modestly toward 1.2890 after the announcement and was around 1.2910 earlier.

Surprise MAS move supports Singapore Dollar

"In a surprise move, the Monetary Authority of Singapore (MAS) tightened monetary policy for the second consecutive meeting."

"It increased the rate of appreciation of the SGD NEER policy band “very slightly”, with no changes to the centre or width of the band. Importantly, MAS said that the increase was smaller than the tightening in April."

"MAS could have easily left policy unchanged given that inflation remains relatively benign, and energy prices have retreated from their April peaks."

"The official forecast is likely to be revised up from 2-4% currently. MAS maintained its headline and core inflation forecasts at 1.5-2.5% for 2026. USD/SGD fell only modestly to around 1.2890 following the announcement."

"Its decision to act signals that MAS remains more concerned about the upside risks to inflation than the downside risks to growth. Growth was stronger-than-expected in H1 2026 at 6%."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)