Related Insights
The Monetary Authority of Singapore slightly increased the slope of the SGD NEER policy band today, in line with our expectations. We were also correct that this year’s core inflation forecast would be revised to 1.5-2.5% from 1-2% previously. Together, the central bank has positioned its exchange rate policy to balance the immediate imported inflation risks from the Middle East oil shock over the next few quarters, amid expectations for the positive output gap to narrow and average around 0% over the course of the year, driven by slower global growth, including Singapore. The Ministry of Trade and Industry will update its 2026 GDP growth outlook, currently at 2-4%, in May. 
Today’s decision is consistent with our call for the central bank to normalize the policy band by taking back the slope reductions in January and April 2025. Given the considerable concomitant risks posed to inflation from elevated oil prices, and the economy from energy supply disruption, the MAS would want to maintain policy flexibility, backed by its readiness to curb excessive volatility in the SGD NEER, alongside its decision not to adjust the centre or the width of the band. According to our model, the SGD NEER has averaged 1.7% above the band’s mid-point after Operation Epic Fury. The latest slope adjustment should allow the SGD NEER to increase faster year-on-year with the new inflation forecasts. As for USD/SGD, it remains tied to the DXY Index as a price taker. 
Global markets were defiantly complacent in the face of deepening Middle East crisis. Despite the collapse of the Islamabad peace talks and President Donald Trump’s subsequent move to blockade the Strait of Hormuz, the USD’s haven status proved remarkably fleeting. The DXY Index’s sixth consecutive session of depreciation to 98.37, paired with the S&P 500’s 1% surge to 6886.24, suggested that investors were pricing in a peak risk mindset, looking at a geopolitical stalemate rather than a total escalation. Reflecting this was the US Treasury 10Y yield rejection of this month’s major resistance at 4.36% and its quick decline to below 4.30%, mirroring the Brent crude’s inability to sustain its push above $100 per barrel.
Quote of the Day
“If chess is about the decisive battle, wei qi is about the protracted campaign. The chess player aims for total victory. The wei qi player seeks relative advantage..”
Henry Kissinger
April 14 in history
US President Richard Nixon ended the 20-year embargo in direct trade between the US and the People's Republic of China in 1971.
Topic
GENERAL DISCLOSURE/ DISCLAIMER (For Macroeconomics, Currencies, Interest Rates, Digital Assets or Commodities)[1]
The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.
[#for Distribution in Singapore] This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) which is Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 65-6878-8888 for matters arising from, or in connection with the report.
DBS Bank Ltd., 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982. Tel: 65-6878-8888. Company Registration No. 196800306E.
DBS Bank Ltd., Hong Kong Branch, a company incorporated in Singapore with limited liability. 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability. 11th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
[1] This disclaimer may not apply if they are falls within 'financial instruments' that are within the scope of Article 2(1) EU MAR (e.g. financial instruments that are traded on a regulated market, MTF or OTF, etc.). Section C of Annex I of MiFID2 specifies these 'financial instruments'.