Singapore Dollar: MAS stance supports relative resilience – MUFG

Lloyd Chan at MUFG highlights that Singapore’s June inflation data stayed benign, with modest upticks in headline and core CPI. MAS is expected to keep policy unchanged in July but retain a tightening bias. Strong growth and upside inflation risks create scope for a pre-emptive move, while the restrictive stance should keep the Singapore Dollar relatively resilient versus the Dollar.

Restrictive MAS policy underpins Singapore Dollar

"Meanwhile, Singapore’s June inflation data remained broadly benign, with headline CPI edging up to 1.9%yoy from 1.8%yoy and core inflation rising to 1.6%yoy from 1.4%yoy."

"While food and services inflation firmed during the month, overall price pressures remain contained."

"Our base case remains for MAS to leave policy settings unchanged in July while maintaining a clear tightening bias."

"That said, Singapore’s growth momentum remains strong, while inflation risks are skewed to the upside, so there is a risk of a pre-emptive tightening move next week."

"Nonetheless, whether MAS delivers a hawkish hold or a modest tightening, its already restrictive policy stance should continue to underpin SGD’s relative resilience against the dollar."