The Singapore dollar is projected to strengthen against the US dollar in the latter half of 2026, even as the US Federal Reserve may raise rates by October amid hawkish sentiment. Median Bloomberg surveys forecast the SGD/USD rate to reach about 1.26 by the end of 2026, a roughly 2.4% appreciation from the 1.2912 level observed last week [1, 2, 3, 4, 5].
Australia & New Zealand Banking Group (ANZ) expects the Singapore dollar to reach 1.2550 by year-end, supported by expectations that the Monetary Authority of Singapore (MAS) will tighten its monetary policy by steepening the slope of its policy band by about 50 basis points in July [1, 2, 3, 4, 5]. MAS primarily uses exchange rate management via the Singapore dollar nominal effective exchange rate (S$NEER) band as its main monetary policy tool rather than interest rates.
However, economists differ on the timing of further MAS tightening. While ANZ and others predict a July move, some economists expect MAS to hold policy steady then and delay additional tightening until possibly October due to mild inflation rates [1, 2, 3, 4, 6, 7, 5].
Data released June 23 showed Singapore’s core inflation steady at 1.4% in May 2026—below the 1.6% median Bloomberg forecast—and overall CPI inflation stable at 1.8%, also below the predicted 2% figure [8, 9, 10, 6, 11, 12]. Private transport inflation rose to 8.6% year-on-year in May, driven by higher car and motorcycle prices. Food inflation climbed modestly to 1.8%, while services inflation eased to about 1.3%. Electricity and gas prices fell roughly 3% year-on-year, unchanged from April declines due to tariff lags [8, 9, 10, 6, 11, 12].
The Monetary Authority of Singapore and Ministry of Trade and Industry said higher global energy costs are expected to raise production and transport costs for a wider range of imported goods and services over time as these pass through global supply chains with a lag [8].
Singapore’s economy expanded about 1% year-on-year in Q1 2026, outperforming Bloomberg’s 0.2% forecast and supporting expectations of sustained economic growth [6, 12]. Saktiandi Supaat, head of forex research at Maybank, said such tightening "would be supported by economic growth that remains above potential" [1]. ANZ’s Khoon Goh noted that "risks to inflation in Singapore still tilted to the upside despite the recent fall in oil prices," favoring further MAS tightening and a stronger Singapore dollar [1].
MAS and the Ministry of Trade and Industry expect overall and core inflation to average between 1.5% and 2.5% in 2026, consistent with the current mild inflation environment [8, 10, 6, 11, 12].
The next key event is the MAS monetary policy meeting expected in July when it may decide whether to steepen the slope of the S$NEER policy band by about 50 basis points. Market watchers will also monitor the US Federal Reserve’s possible interest rate hike scheduled for October.
