SGD Modestly Firmer Post MAS/Q3 GDP Beat

USD/SGD sits a touch lower versus pre MAS levels. The pair last near 1.3690 (lows for the session sit at 1.3684). We were closer to 1.3700 in earlier dealings. The SGD NEER (Goldman Sachs estimate) has ticked higher post the outcome. At the Thursday close the NEER was -0.60% away from the top end of the band. We now track around -0.54% from the top end, so slightly tighter but within recent ranges.

• The MAS outcome looks broadly in line with market expectations. The focus is likely to be on how quickly core inflation comes down, although the central bank notes that a sustained NNER appreciation is necessary to ensure that inflation comes down and medium term price stability is sustained.
• This fits with the global narrative around 'higher for longer' from a policy standpoint, and may have lent some support to the NEER. Equally though, the MAS notes that current settings are sufficiently tight, so the bar for additional tightening is likely to remain quite high.
• Also note Q3 GDP growth was better than expected, so another incremental positive for the currency.
• The MAS has switched to quarterly meetings from the previous semi annual approach. The next meeting will be held in January next year, followed by April, July and October.