SGD is going through a new strengthening cycle

26 Jan, 2022
Category: Currency
Tags: SGD

The Monetary Authority of Singapore (MAS) is setting a goal to strengthen its currency to curb inflation.

Singapore is slightly raising the rate of appreciation of its Sing dollar nominal effective exchange rate (S$NEER) policy band.

S$NEER is the exchange rate of the Singapore dollar managed against a trade-weighted basket of currencies from Singapore’s major trading partners. (US, China, EU, Malaysia, Japan, Taiwan, Australia, South Korea, Indonesia, UK, Vietnam, Phillippines, Thailand, Canada, India)

What does it mean? It means the Monetary Authority of Singapore (MAS) is going to strengthen its currency in order to curb inflation. By raising the slope of its policy band, the MAS is effectively allowing the Sing dollar to appreciate, making imports cheaper and exports more expensive.

You can see a highly correlated pattern between SGD's strength and the $NEER Index. In short, SGD may be starting another round of strengthening cycle.

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SGD is going through a new strengthening cycle

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