Singapore Dollar Flow: Policy Band vs. Global Dollar Weakness

In April 2025, the Monetary Authority of Singapore (MAS) kept its monetary policy unchanged, maintaining the width of the S$NEER policy band and the level at which it was centred. The central bank acknowledged ongoing risks but reiterated its commitment to a path of gradual appreciation, having slightly reduced the slope of that path in its review.

Since then, the Singapore dollar has strengthened significantly, moving toward the top of the policy band. This move has occurred amid a broad-based depreciation of the US dollar globally, putting upward pressure on the S$NEER.

The central bank's stance is now one of vigilance. With the SGD testing the upper boundary of its static band, MAS is positioned to respond to any emerging risks to medium-term price stability, even as its policy framework itself remains fixed.

The Dominant Flow: Global Dollar Depreciation

The Singapore dollar's recent strength is not an isolated event. The US dollar has depreciated broadly, with the USD/SGD rate down -5.66% in 2025. This global dollar weakness is the dominant flow, providing the primary external pressure that has pushed the S$NEER toward the top of its policy band.

While Singapore's own economic resilience supports the currency, the scale of the move points to a larger trend. The MAS acknowledged this in its April 2025 review, noting the S$NEER has strengthened amid the broad-based depreciation in the US$. This means the SGD's gains are largely a function of the dollar's weakness, not a sudden shift in local policy or fundamentals.

Underpinning this flow is a robust current account. Singapore's surplus widened to a record SGD 40.24 billion in Q4 2025. This persistent inflow of foreign currency provides a fundamental floor for the SGD, ensuring that even as the dollar weakens, the S$NEER has a strong structural support to hold its ground.

The Trade Flow Catalyst: Vietnam Surge

Bilateral trade with Vietnam hit a record S$40 billion in 2025, a 26.2% increase from the prior year. This surge is a direct, measurable flow of foreign currency into Singapore. The trade surplus with Vietnam stood at over S$5.8 billion, providing a steady current account inflow that supports the currency.

Singapore's exports to Vietnam rose 16.1% to S$26.8 billion. This growth, driven by machinery and electrical equipment, shows the deepening integration of supply chains. The import side saw even sharper gains, with Vietnamese goods climbing 53.2%, indicating a dynamic, two-way trade relationship.

This trade flow is a tangible economic catalyst. The record surplus means a continuous, predictable channel of foreign exchange is entering Singapore's economy, acting as a fundamental support for the S$NEER. It adds a layer of resilience beyond the broad dollar weakness, grounding the currency's strength in real, expanding commerce.