USD/SGD to move downward to 1.34 by end-2022 – MUFG
03.12.2021, 07:31

USD/SGD to move downward to 1.34 by end-2022 – MUFG

The Singapore dollar was among the Asian currencies that underperformed against the US dollar in November. USD/SGD closed at 1.3694 at the end of November, up from October’s close at 1.3488. Some volatility is expected for the SGD into year-end, amid a strengthening bias, but several factors are supportive against further SGD weakness in 2022, economists at MUFG Bank report.

Inflationary pressures fuel expectations towards tighter monetary policy 

“We forecast USD/SGD at 1.3700 at end-2021, with some potential volatility.”

“Singapore’s economic recovery is gathering steam, as it continues to reopen its economy and as activity levels normalize. However, the Omicron variant is an immediate concern and Singapore may have to take some steps back before moving forward again.” 

“We now expect the MAS to further tighten monetary policy in April 2022, by appreciating the SGD NEER policy band by an estimated 1% p.a. then. This is likely due to broad inflationary pressures, which was a factor in MAS’ move in October. The appreciation policy bias of the SGD NEER should be supportive for the SGD.” 

“We forecast USD/SGD moving lower to 1.3400 at end-2022.”

 

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