Singapore dollar hits 11-year high against greenback

[SINGAPORE] The Singapore dollar strengthened to its strongest level against the greenback since late 2014 on Monday (Jan 26).

The USD/SGD currency pair slumped to 1.2679 during trading hours on Monday, at 10.40 am Singapore time. Conversely, the Singdollar strengthened to around 0.7887 against the greenback.

By 1.13 pm, the USD/SGD pair pared some of its losses to 1.2685, and SGD/USD was at 0.7883.

At 4.15pm, USD/SGD recovered further to 1.2697, while SGD/USD hovered around 0.7876.

US dollar declines

The greenback faced fresh headwinds amid market chatter that the US might coordinate with Japan on currency intervention. Rumours of the joint intervention have weighed heavily on the US dollar, dragging down the US dollar index to 97.09 as at 11.15 am.

The USD suffered its worst weekly decline last week since May 2025, driven first by US President Donald Trump’s sudden Taco (“Trump Always Chickens Out”) on threatened tariffs against the EU over Greenland.

Later, a sharp USD/JPY pullback on suspected interventions spilled over into broader USD selling, analysts from DBS said in a Monday note.

On Sunday, Prime Minister Sanae Takaichi said that the Japanese government would “take necessary steps against speculative or abnormal market moves” when asked about the weaknesses in the Japanese government bonds market and the yen in a talk show.

“However, there has been no confirmation of actual intervention, which could limit downside follow-through in USD/JPY,” DBS analysts said.

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They expect the Fed to pause at its Jan 27-28 Federal Open Market Committee meeting, following three consecutive rate cuts.

Meanwhile, UOB analysts said in a Jan 26 note on USD/SGD: “We did not anticipate the sharp selloff that sent USD plunging to a low of 1.2715. USD continues to weaken on the open today.

“Impulsive downward momentum suggests further USD weakness, but deeply oversold conditions suggest any decline could be limited to a test of 1.2675.”

Domestic strength

The Monetary Authority of Singapore (MAS) is in a “comfortable” position to maintain its current appreciation policy, and is widely expected to leave its exchange-rate settings – the slope, width and mid-point of the policy band – unchanged at its upcoming review on Thursday, analysts from Maybank said in a Monday note.

“MAS should be in a relatively comfortable position (in contrast to the Fed) to maintain current policy stance of slight (0.5 per cent per annum) appreciation, which should provide support for the Singdollar,” they said.

In contrast to the fiscal uncertainties plaguing other developed markets, DBS analysts noted in a Monday note that Singapore Government Securities have outperformed global peers, attracting “flight-to-quality” inflows from investors wary of the fiscal risks in the US and Europe.

Maybank analysts echoed this view, citing the firmness of the trade-weighted Singdollar as “evidence of Singapore’s safe-haven appeal”.

Maybank noted that with the Singdollar’s rally, the Singapore dollar nominal effective exchange rate (S$NEER) is trading at about 1.89 per cent above the implied mid-point of the policy band.

This places the currency near the top of its estimated trading range. Maybank analysts warned that “further sharp moves to the topside would raise the risk of intervention” by the central bank.

DBS sees the currency pair hitting a technical floor. The bank's model estimates that as the trade-weighted Singdollar is just 0.25 per cent away from hitting the policy band’s ceiling, the USD/SGD slide is likely limited to 1.2675.

Projecting UOB’s view over the next one to three weeks, analysts said: “The price action continues to suggest that USD remains weak. The next level to watch is 1.2650.”