UBS projects that the Monetary Authority of Singapore will maintain its current policy stance at the July policy meeting, but the bank anticipates a shift toward tighter settings in October as inflationary pressure is likely to build in the coming months. That outlook underpins the bank's tactical guidance for currency positioning in the Singapore dollar space.
The bank has left its USD/SGD forecasts intact: 1.26 by end-September, 1.25 by end-December, 1.25 by end-March 2027, and 1.24 by end-June 2027. Those forecasts indicate UBS expects modest appreciation of the Singapore dollar against the U.S. dollar over the medium term according to its schedule of quarterly checkpoints.
On U.S. monetary policy, UBS expects the U.S. dollar's current strength to wane over the medium term and judges that the Federal Reserve is unlikely to raise rates. That view contrasts with market pricing that currently implies 45 basis points of additional Fed rate hikes by June 2027, according to UBS's assessment of prevailing market expectations.
For investors with portfolios denominated in Singapore dollars, UBS recommends a specific trade: sell downside risk in the AUD/SGD when the cross falls below 0.885. The bank frames this move as a means of picking up yield, driven by relatively low domestic interest rates across the region that make carry-enhancing strategies more attractive for SGD-based allocations.
UBS's guidance therefore combines a near-term pause from the MAS with a later tightening call, steady USD/SGD trajectory assumptions, and concrete tactical advice for currency portfolio managers seeking incremental yield in a low-rate regional environment.
Contextual notes
- The MAS is expected to hold policy in July and consider tightening in October if inflation trends materialize as UBS expects.
- UBS's USD/SGD path remains at 1.26 at end-September and declines to 1.24 by end-June 2027 in its forecast schedule.
- The bank's recommended AUD/SGD trade targets levels below 0.885 as an entry to sell downside risk for yield pickup.