Singapore: Fiscal and FX coordination on policy – DBS

DBS Group Research economist Chua Han Teng analyzes Singapore’s latest SGD900mn fiscal support package and the Monetary Authority of Singapore’s (MAS) calibrated tightening of the Singapore Dollar (SGD) Nominal Effective Exchange Rate (NEER) band. The report highlights how complementary fiscal and monetary measures aim to tackle inflation and imported cost pressures while Singapore maintains a strong fiscal position that supports investor confidence and capital inflows.

Singapore policy, inflation and capital flows

"The Singapore government’s SGD900mn second support package, announced on July 29, complemented the Monetary Authority of Singapore (MAS)’s decision earlier this week to very slightly increase the appreciation pace of the Singapore dollar nominal effective exchange rate (SGD NEER) policy band."

"Two-thirds of the funding will provide continued crucial relief to households through additional CDC vouchers, enhanced utilities rebates, and assistance for low-income households."

"In contrast, the second government support package was more targeted in nature when also compared to the first tranche."

"We expect the SGD NEER’s annual appreciation to return into the 2026 official inflation forecast range of 1.5-2.5%, broadly dampening imported price pressures given mildly restrictive policy, even as the July monetary tightening was more measured than that in April."

"With geopolitical and economic uncertainties persisting, Singapore’s strong fiscal position stands out among global and regional peers, which we believe should help sustain continued investor confidence and attract further capital inflows."