USD/SGD to plunge towards the 1.28 level into 2022 – ANZ

Economists at ANZ Bank expect the MAS to begin normalising policy at their April 2022 MPS. This will strengthen the SGD even as the US Federal Reserve starts to taper their bond purchases late this year.

Singdollar to decouple from the DXY once market prices in policy normalisation

“Although the MAS is unlikely to change policy at their October meeting, we expect them to set the tone for a tightening next year, which will be SGD supportive. This will be the catalyst to break the current tight correlation between SGD and DXY.” 

“Once the market factors in policy normalisation more fully, the S$NEER will start to move towards the upper bound of the policy band.” 

“Given that the US Fed’s tapering is now well priced in, it is unlikely to have much influence on the SGD. We forecast SGD to end 2021 at 1.32, and climb further to 1.28 into 2022.”