DBS expects recentring of S$NEER band, equivalent to one-off devaluation of 2%

DBS economists now expect an easing in Singapore monetary policy come October, via a recentring of the S$NEER (Singapore dollar nominal effective exchange rate).

In a research note on Monday, DBS said that it foresees the band being recentred lower by half a band. "This is equivalent to a one-off devaluation of 2 per cent," said DBS.

"The USD/SGD has appreciated back above 1.42 after it corrected down to 1.3879 on Sept 17 from its previous peak of 1.4294 on Sept 8. According to our model, the USD/SGD should not deviate far from the ceiling of its implied policy band, currently located around 1.4370," the report added.

Earlier this month, the Monetary Authority of Singapore (MAS) cautioned that both headline and core inflation would come in at the lower half of their 2015 forecast ranges, of -0.5-0.5 per cent and 0.5-1.5 per cent, respectively.