The Singapore dollar is under increasing pressure as renewed trade tensions with the US and speculation of monetary policy easing weigh on the currency.
Already softening alongside a strengthening US dollar, the Singapore currency now confronts new tariff threats. Former US President Donald Trump recently floated the idea of imposing levies on pharmaceuticals and semiconductors—two of Singapore’s key exports—raising concerns among economists.
Firms such as Barclays and Asia Decoded anticipate the Monetary Authority of Singapore (MAS) may soon shift to a more accommodative stance to bolster growth. Moh Siong Sim, a currency strategist at Bank of Singapore, warned that looming tariffs—particularly those on pharmaceuticals expected by Aug 1—could intensify economic headwinds in the second half of 2025.
Sim noted that the Singapore dollar could slide toward S$1.30 per US dollar in the short term, especially if higher US tariffs trigger inflation and delay interest rate cuts by the Federal Reserve. On Monday morning (Jul 21), the currency was trading at S$1.2846 against the greenback.
Priyanka Kishore, principal economist at Asia Decoded, echoed those concerns, noting that Singapore could suffer both from targeted US tariffs and a possible broad base rate increase from 10% on Aug 1.
Market watchers also expect MAS to ease policy at its upcoming meeting later this month. With inflation expected to remain low—economists forecast June’s core inflation at just 0.7%—many believe MAS will act sooner rather than later.
Barclays economists predict that MAS will reduce the slope of its Singapore dollar nominal effective exchange rate (S$NEER) policy band by 50 basis points to zero. Unlike most central banks, MAS manages inflation by adjusting the S$NEER rather than changing interest rates.
Given that the S$NEER is currently near the top of its policy band, flattening the slope would likely limit the Singapore dollar’s strength relative to major trading partners.
“With MAS likely to maintain an easing bias and adjust the S$NEER slope this month, we anticipate further downside for the Singapore dollar,” Kishore said.
Meanwhile, expectations for US interest rate cuts have been pushed back as the Federal Reserve keeps a close eye on inflation risks tied to potential tariffs—giving the US dollar additional strength.
The Singapore dollar may also face pressure as it becomes more widely used in carry trades. Bloomberg Intelligence reported that three out of four of its emerging-market currency models have favored long positions in the Indonesian rupiah while shorting the Singapore dollar.
