“The period of Singapore dollar’s outperformance may be ending as we expect the MAS to commence monetary policy normalization” in April, said Peter Chia, FX strategist at United Overseas Bank (SGX:U11
) . “While it may still strengthen against the US dollar, the gains are likely to lag regional peers going forward.”
The Singapore dollar’s two-year streak as the top-performing Asian currency is seen ending this year as the nation’s central bank may start loosening its policy as soon as April.
The Monetary Authority of Singapore, which uses the exchange rate as its main policy tool rather than interest rates, has let the local dollar appreciate against major trading partners’ currencies to counter price pressures. That may change now as inflation shows signs of slowing.
