With the MAS on hold, the Singdollar will not benefit from any upward re-centring of the policy band like last year. But with its appreciation path still in place, we expect the S$NEER to continue drifting higher and stay in the upper half of the policy band. Singapore continues to attract capital inflows, which the MAS has partly been absorbing via increases in their FX reserves. 

The strong correlation between SGD and the DXY means that the key driver will be from the Dollar side. With the US Federal Reserve close to ending their tightening cycle, we see the DXY falling over the second half of the year, which will help push the SGD stronger. 

We forecast USD/SGD at 1.31 by year-end.