USD/SGD to trade at 1.46 by year-end, turnaround unlikely for now – TDS

The Monetary Authority of Singapore (MAS) only recentred the midpoint of the Singapore Dollar Nominal Effective Exchange Rate (S$NEER) policy band to its prevailing level, leaving the slope and width of the band unchanged. USD/SGD fell close to 1.42 on MAS action, though economists at TD Securities do not see a sustained turnaround in USD/SGD.

Buying USD on dips remains the best proposition

“MAS only re-centred the midpoint of the S$NEER band to its prevailing level, much to our surprise. There was no change to the slope and width of the S$NEER band. We also expected the slope to be raised by 50 bps but the MAS appears to be taking a more cautious approach to avoid over-tightening policy.”

“Post the MAS's decision, USD/SGD fell and was close to the 1.42 handle. We find USDSGD attractive at these levels as it is tough to expect a turnaround in USD/SGD for now.” 

“Buying USD on dips remains the best proposition as the September CPI report suggest the Fed is unlikely to pivot but keep up with its aggressive effort to restrict its inflation-adjusted policy stance. As such, we expect USD resilience in Q4 and see USD/SGD at 1.46 by year-end.”