MAS Holds Singapore Dollar Policy as AI-Led Growth Stays Firm
The Monetary Authority of Singapore (MAS) has kept its exchange-rate policy settings unchanged, maintaining the prevailing rate of appreciation of the Singapore dollar nominal effective exchange rate, or S$NEER, policy band. The decision leaves the band’s width and centre unchanged after MAS tightened twice earlier in 2026.
The move comes as Singapore’s technology-led expansion remains firm but price pressures are expected to ease over 2027. For businesses, the decision keeps the policy backdrop supportive of a gradually stronger Singapore dollar, helping to moderate imported-cost pressures while avoiding another immediate tightening.
Growth is being led by technology
MAS said Singapore’s gross domestic product grew 5.4% year on year in the third quarter of 2026, based on advance estimates from the Ministry of Trade and Industry. On a seasonally adjusted quarter-on-quarter basis, GDP increased 1.1%.
Technology-related sectors led the expansion as global investment in artificial intelligence supported industrial production and trade. MAS said construction, financial services and real estate also showed firm activity, while some consumer-facing segments were weaker.
Strong orders for AI-related products and additional production capacity should sustain near-term growth in technology sectors, MAS said. It expects the pace of AI-related activity to moderate in the second half of 2027 as global financial conditions tighten.
Inflation outlook shapes the decision
MAS Core Inflation rose to 2.1% year on year in July and August, from 1.5% in the second quarter. The authority said higher import costs were passed through to a broader range of goods and services, including electricity and gas tariffs, transportation and food.
Even so, MAS expects inflation to moderate during 2027 as import costs ease and domestic price pressures remain contained. It forecast 2026 core inflation at 1.5% to 2.0%, with CPI-All Items inflation around 2.0%. Both measures are projected to average 1.5% to 2.5% in 2027.
What it means for companies
For importers, retailers and service businesses, an appreciating S$NEER policy band is designed to lean against near-term imported inflation. That matters while energy and food costs remain exposed to global supply disruptions.
For exporters and technology manufacturers, the immediate demand backdrop remains constructive, particularly where firms are linked to AI-related investment. MAS also flagged risks on both sides: a sustained rise in global energy or food prices could lift costs further, while a sharper pullback in AI investment or higher global interest rates could weaken growth.
The policy pause therefore signals confidence that the existing stance is sufficient for now. The next test for businesses will be whether technology demand stays resilient while the expected cooling in external costs and inflation takes hold.
