DBS Group Research expects the Monetary Authority of Singapore (MAS) to make a small upward adjustment to the slope of the Singapore dollar nominal effective exchange rate (SGD NEER) policy band at its 14 April meeting. This would reverse the slope reduction implemented last year.
The expectation is based on Brent crude trading near USD100 per barrel and exports holding up, which may increase attention on imported inflation. MAS is also expected to update its inflation projections.
Expected Inflation Forecast Revisions
Core inflation is forecast to be raised to 1.5–2.5%, from 1–2%. The CPI-All Items forecast is also expected to be increased to reflect higher energy prices.
MAS is due to release 1Q26 advance GDP estimates at the same time as the policy decision. GDP is expected at 5.4% year on year and -1.1% quarter on quarter (seasonally adjusted), compared with 6.3% year on year and 2.1% quarter on quarter (seasonally adjusted) in 4Q25.
We anticipate the Monetary Authority of Singapore will tighten policy on April 14 by slightly increasing the slope of the SGD NEER policy band. This move would reverse the easing stance we saw last year in 2025. The aim is to allow for a faster, but still modest, appreciation of the Singapore dollar to combat rising prices.
The policy priority has shifted to tackling imported inflation, especially with Brent crude prices holding firm around the USD100 per barrel level throughout the quarter. Recent data supports this move, as Singapore’s non-oil domestic exports for March 2026 grew by a resilient 4.5%, showing the economy can withstand a stronger currency. This gives the central bank cover to focus on controlling inflation.
Trading Implications For Sgd
For derivative traders, this outlook suggests positioning for a stronger Singapore dollar against currencies like the US dollar. One could consider buying SGD call options, as a hawkish statement could cause the currency to strengthen. Historically, after the MAS tightened policy unexpectedly in 2022, the SGD appreciated significantly against the USD over the next three months.
The upcoming 1Q26 advance GDP estimate, which we expect to be a strong 5.4% year-on-year, further justifies a tightening move. Even though this is a moderation from late 2025, it confirms the economy is on solid footing. Therefore, using forward contracts to establish long SGD positions ahead of the meeting could be beneficial.
This policy shift will also likely put upward pressure on domestic interest rates. Traders should anticipate a rise in the Singapore Overnight Rate Average (SORA). Positioning for this through interest rate swaps could prove profitable, especially since March’s core inflation figure of 2.1% already justifies higher rates.
Implied volatility on SGD options will likely remain high leading into the announcement. The key will be the MAS raising its official inflation forecasts as we expect. An upgraded core inflation forecast to a range of 1.5-2.5% would confirm this hawkish pivot and likely sustain the Singapore dollar’s strength in the weeks ahead.
