Latest news with #S$Neer
Straits Times
30-07-2025
- Business
- Straits Times
MAS keeps Singapore dollar policy unchanged amid US tariff risks to economy
Sign up now: Get ST's newsletters delivered to your inbox MAS has already eased the pace of the Singdollar's appreciation twice this year - in January and April. SINGAPORE - Singapore's central bank left the pace of the local currency's trade-weighted appreciation unchanged, amid easing inflation and the risk of an economic slowdown in the second half of the year due to US President Donald Trump's tariffs. The Monetary Authority of Singapore (MAS) also kept its forecast for 2025 core inflation – which excludes private transport and accommodation costs to better represent household expenses – at an average of 0.5 per cent to 1.5 per cent. 'MAS will maintain the prevailing rate of appreciation of the S$Neer (Singapore dollar nominal effective exchnage rate) policy band. There will be no change to its width and the level at which it is centred.' it announced on July 30. Unlike other central banks, the MAS manages monetary policy by letting the local dollar rise or fall against a basket of currencies of Singapore's main trading partners within an undisclosed trading band, which is the S$Neer. The decision to maintain its policy stance comes after MAS eased the pace of S$Neer appreciation twice earlier this year - in January and April. MAS said this put it 'in an appropriate position to respond to risks to medium-term price stability'. The central bank said that despite uncertainty over the outlook, the global economy and Singapore's domestic economy have been resilient thus far. However, it added: 'GDP (gross domestic product) growth in Singapore is expected to slow in the second inflationary pressures should remain contained in the near term. 'Given the uncertainties, MAS will closely monitor global and economic developments, and remain vigilant to risks to inflation and growth.' The MAS policy statements usually have implications for the value of the Singapore dollar against other currencies – which is important for Singaporeans planning to travel abroad or making hefty payments such as tuition fees for their children studying abroad. The Singapore dollar was little changed at 1.2867 to a US dollar in early trade on July 30. However, on a year-to-date basis the local currency was up 5.3 per cent versus the greenback, which has suffered against against most currencies, mainly because of the uncertainty around US President Trump's so-called reciprocal tariff policy. MAS said that over the rest of the year, economic growth momentum should moderate as the unusal spike in exports to get ahaead of US tariffs dissipates. Meanwhile, the drag on global demand will likely intensify as previously delayed US tariffs are implemented. ''However, the risk of a sharp step-down in global growth in the near term has receded along with the general de-escalation in trade tensions as well as more benign financial conditions since April,' MAS said. Despite uncertainty exterted by US tariffs, Singapore's economy so far this has surprised on the upside. It posted a surprisingly high year-on-year gross domestic product growth of 4.3 per cent in the second quarter of 2025, following a 4.1 per cent gain in the first three months – outperforming the Ministry of Trade and Industry's forecast of zero per cent to 2 per cent growth for the full year. Meanwhile, core inflation – which excludes private transport and accommodation to better reflect household expenses – came in at 0.6 per cent in June 2025 on a year-on-year basis, the same level as May. The surprising economic resilience is mostly attributed to US importers booking larger quantities of goods than usual for the first half of the year to mitigate the potential cost increases associated with new tariffs. The strategy, called front-loading, boosted exports to unusually high levels during the period from many Asian countries, including Singapore. However, most analysts believe it is payback time now. Front-loading would start to fade in the second half of 2025 as importers would tap the stockpiles they had built in the first six months. Hence, exports and manufacturing output would trail the first-half performance, while inflation would remain mild at best. MAS said Singapore's GDP growth is projected to moderate in the second half of 2025 from its strong pace in the the first six months of the year. 'In particular, the trade-related sectors should see some pullback, even as activity in the construction sector as well as segments within financial services are supported by a pickup in infrastructure investment and more accommodative financial conditions.'
Straits Times
28-07-2025
- Business
- Straits Times
Resilient economy versus uncertain outlook splits views on Singapore's monetary policy
SINGAPORE - Better-than-expected economic growth and declining inflation so far this year are reason enough for Singapore's central bank to leave its currency-driven monetary policy unchanged. This is what many analysts believe will happen on July 30 when the Monetary Authority of Singapore (MAS) releases its quarterly policy statement. However, this is not a consensus view. Quite a few analysts believe that the uncertainty over growth and inflation outlook might prompt MAS to further ease its policy stance. The MAS has already eased its policy stance twice this year to slow the rate of S$Neer appreciation. The MAS policy statements usually have implications for the value of the Singapore dollar against other currencies – which is important for Singaporeans planning to travel abroad or making hefty payments such as tuition fees for their children studying abroad. Unlike other central banks, the MAS manages monetary policy by letting the local dollar rise or fall against a basket of currencies of Singapore's main trading partners within an undisclosed trading band, known as the Singapore dollar nominal effective exchange rate, or S$Neer. MAS's primary tool for managing the S$Neer is intervention operations in the spot foreign exchange market, which involves the sale or purchase of US dollars against the Singapore dollar to ensure that the S$Neer is kept within the policy band, and is consistent with domestic price stability.
Straits Times
21-07-2025
- Business
- Straits Times
Singapore dollar faces pressure from US tariffs, policy shift
The Singapore dollar is under renewed pressure from US tariffs and as speculation of exchange-rate policy easing rises. SINGAPORE – The Singapore dollar is under renewed pressure as US trade challenges are primed to worsen and as speculation of exchange-rate policy easing rises. The Singdollar, which is already weakening as the US dollar recovers, faces fresh tariff threats after US President Donald Trump recently warned he may impose levies on pharmaceuticals and semiconductors, two of Singapore's key exports. Economists at firms such as Barclays and Asia Decoded expect the Monetary Authority of Singapore (MAS) to move to a more accommodative policy setting in July to support the economy. 'The tariff uncertainty, with higher tariffs on pharmaceuticals likely Aug 1, could add to growth headwinds for Singapore in the second half,' said Moh Siong Sim, a currency strategist at Bank of Singapore. The local dollar may weaken toward $1.30 to the greenback in the near term, especially if rising levies stoke US inflation and delay Federal Reserve interest rate cuts, he said. The Singdollar was at 1.2846 to the US dollar at 8.10am local time on July 21. Those concerns are echoed by Priyanka Kishore, principal economist at Asia Decoded. 'Singapore is not only at a disadvantage from the prospect of sectoral tariffs on pharmaceuticals and semiconductors, but may also see an increase in the base rate of 10 per cent on Aug 1,' she said. Some strategists believe MAS will ease policy when it meets later in July, given inflation appears subdued. Economists predict data due on July 23 will show core inflation rose by just 0.7 per cent in June. Top stories Swipe. Select. Stay informed. Singapore Priority for singles, higher quota for second-timer families to kick in from HDB's July BTO exercise Singapore Witness stand not arena for humiliation in sex offence cases, judge reminds lawyers Asia PM Ishiba under siege after trouncing in Upper House polls as 'Japanese First' Sanseito gains Business Bigger, quieter, greener: High-volume low-speed fans see rising demand in warming Singapore Singapore New home owners in Singapore find kampung spirit on BTO Telegram groups Singapore What would it take for S'pore to shed the dirty image of its blue recycling bins? Business DBS hits record high above $47; CDL up after director Philip Yeo announces resignation MAS will flatten the slope of its Singapore dollar nominal effective exchange rate, or S$Neer, policy band by 50 basis points to zero in July, rather than waiting, Barclays Bank economists wrote in a note last week. Unlike many of its global peers, Singapore's central bank manages inflation by adjusting the S$Neer policy band rather than altering interest rates. With the S$Neer trading near the top end of the band, any flattening of the slope will cap the currency's relative strength to its major trading partners. 'With the MAS likely to stay on an easing path and flatten the slope of the S$Neer this month, our bias is for further Singapore dollar weakness,' Asia Decoded's Ms Kishore said. While Singapore's central bank looks likely to ease policy, bets on Fed rate hikes have been pushed back as policymakers watch for tariff-related inflation, bolstering the US currency. The Singapore dollar's use as a funding vehicle for carry trades may also weigh on its outlook. Carry trades are a type of foreign exchange trade in which you borrow money in one currency at low interest and invest in another currency that provides a higher rate of return. Bloomberg Intelligence said in July that three of the four emerging-market exchange factor models it uses in its analysis have gone long the Indonesian rupiah versus short the Singapore dollar. BLOOMBERG
Straits Times
21-07-2025
- Business
- Straits Times
Singapore dollar faces downward pressure from US tariffs, policy shift
The Singapore dollar is under renewed pressure from US tariffs and as speculation of exchange-rate policy easing rises. SINGAPORE – The Singapore dollar is under renewed pressure as US trade challenges are primed to worsen and as speculation of exchange-rate policy easing rises. The Singdollar, which is already weakening as the US dollar recovers, faces fresh tariff threats after US President Donald Trump recently warned he may impose levies on pharmaceuticals and semiconductors, two of Singapore's key exports. Economists at firms such as Barclays and Asia Decoded expect the Monetary Authority of Singapore (MAS) to move to a more accommodative policy setting in July to support the economy. 'The tariff uncertainty, with higher tariffs on pharmaceuticals likely Aug 1, could add to growth headwinds for Singapore in the second half,' said Moh Siong Sim, a currency strategist at Bank of Singapore. The local dollar may weaken toward $1.30 to the greenback in the near term, especially if rising levies stoke US inflation and delay Federal Reserve interest rate cuts, he said. The Singdollar was at 1.2846 to the US dollar at 8.10am local time on July 21. Those concerns are echoed by Priyanka Kishore, principal economist at Asia Decoded. 'Singapore is not only at a disadvantage from the prospect of sectoral tariffs on pharmaceuticals and semiconductors, but may also see an increase in the base rate of 10 per cent on Aug 1,' she said. Some strategists believe MAS will ease policy when it meets later in July, given inflation appears subdued. Economists predict data due on July 23 will show core inflation rose by just 0.7 per cent in June. Top stories Swipe. Select. Stay informed. Singapore Priority for singles, higher quota for second-timer families to kick in from HDB's July BTO exercise Singapore Witness stand not arena for humiliation in sex offence cases, judge reminds lawyers Asia PM Ishiba under siege after trouncing in Upper House polls as 'Japanese First' Sanseito gains Business Bigger, quieter, greener: High-volume low-speed fans see rising demand in warming Singapore Singapore New home owners in Singapore find kampung spirit on BTO Telegram groups Singapore What would it take for S'pore to shed the dirty image of its blue recycling bins? Business DBS hits record high above $47; CDL up after director Philip Yeo announces resignation MAS will flatten the slope of its Singapore dollar nominal effective exchange rate, or S$Neer, policy band by 50 basis points to zero in July, rather than waiting, Barclays Bank economists wrote in a note last week. Unlike many of its global peers, Singapore's central bank manages inflation by adjusting the S$Neer policy band rather than altering interest rates. With the S$Neer trading near the top end of the band, any flattening of the slope will cap the currency's relative strength to its major trading partners. 'With the MAS likely to stay on an easing path and flatten the slope of the S$Neer this month, our bias is for further Singapore dollar weakness,' Asia Decoded's Ms Kishore said. While Singapore's central bank looks likely to ease policy, bets on Fed rate hikes have been pushed back as policymakers watch for tariff-related inflation, bolstering the US currency. The Singapore dollar's use as a funding vehicle for carry trades may also weigh on its outlook. Carry trades are a type of foreign exchange trade in which you borrow money in one currency at low interest and invest in another currency that provides a higher rate of return. Bloomberg Intelligence said in July that three of the four emerging-market exchange factor models it uses in its analysis have gone long the Indonesian rupiah versus short the Singapore dollar. BLOOMBERG
