CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

USD/SGD soars to five-month high following MAS comments

The Singdollar weakened against the greenback after the Singapore central bank indicated an easing of the exchange rate.

The USD/SGD skyrocketed 0.36% to a five-month high of 1.38647 on Thursday 06 February.

SGD dropped after MAS indicated ‘room within policy band’

The rally took place as the Singapore dollar weakened against the greenback, shortly after the Monetary Authority of Singapore (MAS) released a statement saying that there is sufficient room within its currency policy band to accommodate an easing of the Singapore Dollar Nominal Effective Exchange Rate (S$NEER).

MAS said this is in line with the weakening of economic conditions as a result of the outbreak of the 2019 novel coronavirus (2019-nCoV) in China and other countries, including Singapore.

The S$NEER is a float regime that manages the Singapore dollar against a trade-weighted basket of currencies within a policy band. The Singapore central bank’s monetary policy framework is centred on the S$NEER regime.

If MAS were to tighten the policy band, there would be an appreciation in the Singapore dollar, and if they were to loosen the policy band, the pace of appreciation is likely to be reduced.

Trade the USD/SGD and other forex pairs with IG's industry-leading trading platform today.

Can the USD/SGD sustain this level?

Prior to the comments, the USD/SGD was trading sideways around the 1.38144 mark.

The currency pair has calmed down slightly by late-Thursday morning to around 1.38513.

UOB analysts said that the USD could probe the 1.3840 resistance, but that a sustained rise above this level is unlikely (next resistance is at 1.3880) throughout the rest of Thursday. On the downside, 1.3765 is expected to be strong enough to hold any intraday pull-back (minor support is at 1.3790).

The bank added in its daily note: ‘USD has come a long way since we indicated about 2 weeks ago that “downward pressure has dissipated” and expected it to “edge higher”.

‘While our expectation for USD to move higher is correct, we did not anticipate the pace of the advance as the “correction” morphed rapidly into a full-fledged uptrend. As of yesterday (05 February), USD not only registered a higher high for the eighth straight day, it also came close to erasing all the three-month decline from the October’s peak of 1.3878 within the span of about two weeks.’

From here, analysts posit that the USD appears poised to register the largest two-week advance since Trump was elected as president more than three years ago in November 2016.

MAS policy band due for review in April 2020

For now, the market will have to contend with the fact that MAS’ policy band is only due for a review in April.

The last time MAS adjusted the policy band was in October 2019, when it reduced slightly the rate of appreciation of the SGD by loosening the S$NEER policy band. It had stated that it would ‘closely monitor economic developments and is prepared to recalibrate monetary policy should prospect for inflation and growth weaken significantly’.

The S$NEER has been fluctuating near the upper bound of the policy band since then, the Singapore central bank further noted in Wednesday’s note.

Trade the USD/SGD and other currency pairs with IG's industry-leading trading platform today.


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Start trading forex today

Find opportunity on the world’s most-traded – and most-volatile – financial market

  • Trade spreads from just 0.6 points on EUR/USD
  • Analyse with clear, fast charts
  • Speculate wherever you are with our intuitive mobile apps

See an FX opportunity?

Try a risk-free trade in your demo account, and see whether you’re onto something.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off

See an FX opportunity?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Get spreads from just 0.6 points on popular pairs
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See an FX opportunity?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.