In its Monetary Policy Statement this morning, the MAS reduced the slope of the SGD NEER policy band to a neutral slope. This may impart some implicit heaviness for the USD/SGD, per OCBC Bank.
“The MAS reduced the slope of the SGD NEER policy band to a neutral slope ‘starting at the prevailing level of the SGD NEER’, which has ‘depreciated to a level slightly below the mid-point of the policy band’. We interpret this as a slight re-centre of the policy band lower.”
“Expect a near term range between 1.4200 and 1.4300. Post this move, our estimated SGD NEER now stands at its perceived parity level (1.4271).”