Singapore Dollar: Stronger Singapore growth with contained inflation – Commerzbank

Commerzbank’s Singapore-based team highlights robust Singapore manufacturing and electronics PMIs, supported by an AI-driven semiconductor cycle, alongside upgraded MAS Survey GDP and export forecasts. With 2026 inflation expectations revised lower and MAS seen possibly steepening the SGD NEER slope in October, professional forecasters raised their median end-2026 USD/SGD forecast, while Commerzbank looks for near-term consolidation in a defined range.

AI cycle supports Singapore Dollar

"Singapore's manufacturing sector strengthened further in August, with the PMI edging up to 51.5 from 51.4 in July, marking the 13th consecutive month of expansion. Encouragingly, new orders rose to 52.0 from 51.9 previously, new export orders were also slightly firmer at 51.7 from 51.6 previously, and employment picked up to 51.2 from 51.1 previously. "

"The electronics PMI was even firmer at 52.6 from 52.4 previously, its 15th straight month above 50, supported by the AI-driven semiconductor cycle. Electronics new orders were firmer at 53.3 from 53.1 previously, while electronics new export orders were also firmer at 52.8 from 52.6 previously."

"Overall, the data point to continued strength in electronics output in the coming months. However, supply-chain disruptions remain evident, with supplier deliveries deteriorating further and input prices rising."

"The latest MAS Survey of Professional Forecasters for September reinforces the strong-growth picture. The median 2026 GDP growth forecast was raised sharply to 5.0% from 3.5% in June, close to the upper end of the government's 4.5-5.5% range. Manufacturing growth was upgraded to 8.4% from 5.0%, while the non-oil domestic exports (NODX) forecast was revised up sharply to 17.0% from 6.1% previously."

"The 2026 headline inflation forecast was cut to 2.1% from 2.3% and core inflation to 1.9% from 2.0%. MAS is projecting headline and core inflation at 1.5-2.5% this year. On monetary policy, 45% of respondents expect MAS to steepen the SGD NEER slope again in October, up from 30% in June, while 55% expect no change."

"For USD/SGD, the combination of stronger growth but contained inflation is modestly supportive of SGD."

"We look for consolidation between 1.2650-1.2800 in the near term."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)