Growth and inflation are already recovering.
The Singapore dollar will remain well within its policy band this year, making another policy easing by the Monetary Authority of Singapore (MAS) unlikely.
DBS forecasts that Singapore’s economic growth will improve back into its official medium-term target of 2%-4%. Meanwhile, inflation is expected to turn positive again after several consecutive quarters of persistent deflation.
“Unless low oil prices and global market volatility upset our improving growth/inflation outlook, the central bank is unlikely to adjust its SGD policy at its semi-annual policy reviews in April and October,” says DBS.
DBS expects the USD/SGD trading range to rise to 1.4590-1.5170 by end-2016 from the current 1.3960-1.4540 band, with the exchange rate forecasted to fall to the mid of its price channel in the fourth quarter of 2016.
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