The Monetary Authority of Singapore is expected to keep the SGD NEER policy band parameters unchanged in its upcoming review. The exchange rate for USD\/SGD is forecasted to stay above 1.2675.<\/p>\n
Senior FX Strategist at DBS Bank suggests the stability of the three parameters: slope, mid-point, and width of the SGD NEER policy band. Current models indicate the SGD NEER was 0.25% below its ceiling, implying limited room for USD\/SGD downturn absent a wider global USD decline.<\/p>\n
Around this time in 2025, we saw expectations for the Monetary Authority of Singapore to keep its policy unchanged. The SGD was seen as having limited room to strengthen, with the USD\/SGD exchange rate expected to stay firm. This outlook for stability set a specific tone for the market leading into last year’s policy review.<\/p>\n
Looking back, the MAS did indeed maintain the slope, width, and center of its policy band throughout 2025, which helped keep the currency in a predictable range. This has contributed to a significant drop in volatility, with one-month implied volatility for USD\/SGD options now hovering near a low of 4.3%. Such low volatility suggests the market is not pricing in any major surprises for the upcoming policy meeting.<\/p>\n
As we approach the January 29th meeting this year, the economic backdrop supports a similar steady stance. Singapore’s core inflation has eased to 2.9% year-on-year, well off its peaks, reducing pressure for further policy tightening. With GDP growth forecast to be a modest 2% to 3% for 2026, the central bank has little incentive to jolt the market.<\/p>\n
For derivative traders, this environment suggests that selling options to collect premium could be a viable strategy. Short straddles or strangles on USD\/SGD, centered around the current spot rate, could benefit from the expected lack of significant movement post-announcement. The low implied volatility means premiums are not rich, but it also reflects the market’s strong conviction that the currency will remain range-bound.<\/p>\n
However, we must watch the broader US dollar trend, as any significant global shifts could still impact the pair. Traders could consider buying cheap, out-of-the-money options as a hedge against an unexpected policy statement or a sharp move in the dollar index. Given the current setup, any break outside the established trading range would likely signal a more significant shift in sentiment.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" MAS likely to maintain SGD policy band; USD\/SGD seen stable above 1.2675 amid limited downside.<\/p>\n","protected":false},"author":62,"featured_media":17022,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-40174","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/40174","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=40174"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/40174\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/17022"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=40174"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=40174"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=40174"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}