In addition, the MAS lowered its core inflation target, opening the door for further easing this year, which may also weigh on the currency. The central bank uses the exchange rate as its main policy tool rather than interest rates. It focuses on the currency’s nominal effective exchange rate, referred to as S$NEER, which it allows to move within a policy band.
The Singapore dollar is the top-performing Southeast Asian currency this year, but slowing inflation and growth worries may push it down the rankings in coming months.
The city-state’s currency is up about 5% versus the dollar this year, sending its value against a trade-weighted basket of currencies toward the upper boundary of the Monetary Authority of Singapore’s policy band. However, headwinds appear to be picking up, with the trade ministry last month cutting its 2025 GDP growth forecast to a range of 0% to 2%, citing global trade tensions.
