SINGAPORE, 6 JANUARY 2026 — The Singapore dollar (SGD) is expected to appreciate modestly against other regional currencies in 2026, reflecting Singapore’s resilient economic fundamentals and a stable monetary policy outlook, according to OCBC Bank’s chief economist Selena Ling.
Speaking at an investment seminar in Singapore, Ling said the city-state remains in a “sweet spot” as it enters 2026, underpinned by strong economic growth, solid domestic demand and a stable monetary environment.
Why the Singdollar May Strengthen in 2026
Ling noted that the low inflation environment seen in 2025 may rise slightly in 2026, but is not expected to trigger changes to the Monetary Authority of Singapore’s (MAS) exchange rate-based policy stance. Instead, MAS is anticipated to maintain the current policy settings, which allow for a controlled, slight appreciation in Singapore’s nominal effective exchange rate (S$NEER), the central policy tool managing the currency against a basket of peers.
In this context, Ling said the SGD is likely to appreciate modestly against regional currencies such as the Japanese yen and others in Southeast Asia. This strength could benefit Singaporean consumers travelling abroad and investors exposed to regional currency dynamics.
Economic Drivers and Outlook
Singapore’s economy delivered robust growth of 4.8% in 2025, driven by global demand for electronics, biomedical and AI-related manufacturing, outpacing official forecasts, a performance that underpins a strong currency backdrop.
Ling highlighted that if conditions such as the AI boom, continued strength in finance and insurance sectors, and higher visitor arrivals persist, the Singapore economy may even exceed its official GDP forecast of 1–3% in 2026, further supporting ASEAN-wide currency dynamics.
Monetary Policy and Inflation Context
The MAS uses the Singapore dollar Nominal Effective Exchange Rate (S$NEER) as its primary policy tool, adjusting the slope of the policy band to influence the SGD’s value. With inflation remaining moderate, there is no urgency for major policy shifts, a supportive backdrop for SGD strength.
Economists broadly expect core inflation and headline inflation to remain subdued in 2026, while core price pressures have been stable, reflecting MAS’s careful calibration to balance price stability and economic growth.
Regional Currency Trends
A modest sterling of the Singapore dollar in 2026 aligns with broader FX forecasts that anticipate the SGD maintaining a slight appreciating bias versus regional peers, particularly if the U.S. dollar softens due to expected Federal Reserve rate cuts or continued global diversification away from the greenback.
However, currency markets remain sensitive to global risk sentiment, trade dynamics and macroeconomic policy shifts, meaning the extent of SGD appreciation will depend on the relative economic performance of regional economies and external monetary factors.
