RHB Bank’s latest Global Economics and Market Strategy Report, authored by Group Chief Economist Barnabas Gan, indicates that the Monetary Authority of Singapore’s (MAS) Singapore dollar nominal effective exchange rate (S$NEER) is nearing the top-bound of its policy band. The report, released on 22 May 2025, suggests that the S$NEER is testing the 2.0% upper limit above its mid-point, implying limited room for further appreciation.
The report highlights that RHB’s revised S$NEER model, which incorporates 14 statistically relevant currencies, maintains a high weekly correlation of 0.996 with a percentage deviation of +/- 0.08%. This suggests that the model is robust in tracking the S$NEER’s movements.
Gan anticipates that MAS will keep the S$NEER policy band unchanged throughout 2025, maintaining the current appreciation slope of +0.5% with a ±1.0% band width. However, he does not dismiss the possibility of MAS flattening the slope or widening the band width in future reviews if economic conditions deteriorate.
This analysis is crucial as it provides insights into Singapore’s monetary policy direction amidst global economic uncertainties. The potential adjustments by MAS could have significant implications for businesses and investors relying on currency stability.
RHB’s report underscores the importance of monitoring economic indicators closely, as any shift in MAS’s policy could impact Singapore’s economic landscape.
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