Singapore Dollar remains rangebound amid weaker data – Commerzbank

Singapore’s softer September inflation and manufacturing readings indicate that underlying price pressures remain contained despite higher global energy costs, according to Commerzbank’s Dr. Henry Hao and FX analyst Charlie Lay. With its 2026 inflation forecasts narrowed, MAS continues to expect inflation of 1.5–2.5% in 2027. Although industrial production has moderated, GDP growth for 2026 is still likely to exceed 5%. This backdrop supports maintaining the modest appreciation path for the SGD NEER, alongside a stable USD/SGD trading range.

SGD stability finds support in softer data

"Singapore's September inflation eased to 2.2% yoy from 2.3% previously, while the MAS core inflation eased to 2.0% from 2.2% previously. The moderation in headline inflation was partly driven by softer transport inflation, which eased to 7.4% from 8.1%, although food inflation edged up to 2.4% from 2.3%, and healthcare inflation increased to 3.6% from 3.3%. The softer readings suggest that underlying price pressures remain relatively contained despite elevated global energy prices and supply disruptions in the Middle East."

"Earlier this month, MAS narrowed its 2026 core inflation forecast to 1.5-2.0% from 1.5-2.5% previously, while projecting headline inflation at around 2%. Year-to-date, headline and core inflation averaged 1.8% and 1.6% respectively. MAS projects both headline and core inflation at 1.5-2.5% in 2027. It expects import inflation to remain firm in the near term but some easing in external cost pressures next year."

"Industrial production averaged around 8.8% in Q3 compared to the average of 11.5% for July-August. The advance Q3 GDP of 5.4% yoy was based on July-August data, and as such, we could see a slight downward revision to the final Q3 GDP when it is released next month."

"2026 GDP growth is still likely to be above 5% given the 6% growth seen in the first three quarters of this year. We could see the official forecast for this year raised to 5-6% from 4.5-5.5% currently."

"The combination of softer inflation and moderating manufacturing growth will strengthen the case for MAS to maintain the status quo of a modest appreciation path for the SGD NEER. USD/SGD held steady yesterday at around 1.2800. It has been range bound between 1.2750-1.2880 since mid-September."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)