MAS S$NEER policy: how does it work, and what are the policy decisions in 2025?

The Monetary Authority of Singapore (MAS) surprised some market observers in 2025 by embarking on a path of monetary policy easing, a notable departure from its previous tightening cycle. After two consecutive rounds of loosening, the central bank held its policy steady at its July meeting. For traders and investors, understanding the mechanics of MAS' exchange rate-based policy and the rationale behind these decisions is crucial. This blog will explore how the S$ Nominal Effective Exchange Rate (S$NEER) works and what prompted MAS' strategic shifts in the first half of 2025.

Unlike most of the world's central banks that use interest rates to manage inflation, MAS conducts its monetary policy by managing the Singapore Dollar Nominal Effective Exchange Rate (S$NEER). This is a trade-weighted basket of currencies from Singapore's key trading partners. The central bank's policy is governed by the "BBC" framework.

This operating framework for monetary policy is characterised by a 'Basket', 'Band' and 'Crawl'.

The Singapore Dollar Nominal Effective Exchange Rate (S$NEER), which is a trade-weighted basket of currencies, is MAS' intermediate target of monetary policy.

The S$NEER is allowed to float within a policy band.

The policy band is set to crawl or typically rise at different rates over time.

MAS sets a level and path for the S$NEER policy band at each monetary policy review to ensure price stability over the medium term. MAS' commitment to achieving low and stable inflation through this framework is the nominal anchor for the Singapore economy.

MAS issues a Monetary Policy Statement (MPS) four times a year—in January, April, July, and October—to announce its policy decisions.

The first signal of a policy change came in January. Global growth was showing signs of slowing down, and more importantly, inflationary pressures were easing faster than expected. MAS Core Inflation, which excludes accommodation and private transport costs, had moderated significantly in late 2024. In response, MAS made a measured adjustment to its policy.

It slightly reduced the slope of the S$NEER policy band. There was no change made to the width of the policy band or the level at which it is centred. This measured adjustment was consistent with a modest and gradual appreciation path of the S$NEER policy band that would ensure medium-term price stability.

In its April 2025 monetary policy review, MAS kept the Singapore dollar nominal effective exchange rate (S$NEER) policy band on a modest and gradual appreciation path but reduced its slope slightly again. The width of the band and the level at which it was centred remained unchanged.

Heightened global trade policy uncertainty and a series of new tariffs from major economies began to weigh on the growth prospects for Singapore's highly trade-dependent economy.

Global and regional trade activity was expected to weaken, and the manufacturing and services sectors were showing signs of a slowdown. The Ministry of Trade and Industry (MTI) downgraded its 2025 GDP growth forecast.

In its most recent meeting on July 30, MAS opted to keep its monetary policy unchanged. This decision came after two consecutive easings and was seen as a strategic pause to assess the effectiveness of the earlier moves and the evolving global economic situation.

The USD/SGD hit a multi-year low of 1.1992 in July 2011 and underwent a long-term secular uptrend phase till December 2016, where it printed a high of 1.4537 in December 2016.

Since the watershed year of 2016, shaped by two major US dollar–positive shocks: the Brexit vote on 23 June and Donald Trump’s election on 8 November, the Singapore dollar has shown resilience against the greenback, supported by Singapore’s strong external balance, prudent monetary policy by the MAS, and its status as a regional safe-haven currency.

The USD/SGD has failed to break above the significant resistance level of 1.4540 on two occasions that coincided with risk-off events; the onset of the global lockdown in March 2020 due to the COVID-19 pandemic, and stagflation fear that arose in the second half of 2022, in line with the 11 interest rate hikes by the US Federal Reserve from March 2022 to July 2023.

Considering the recent developments in 2025, external growth uncertainties inflicted by US tariffs, and the ongoing slowdown of the inflation trend in Singapore (core inflation rate declined by 0.5% y/y in July 2025 from 2.8% y/y in September 2024), the SGD has outperformed against the US dollar and other Asia Pacific currencies.

As of 25 August 2025, the SGD has appreciated 6.45% against the US dollar year-to-date, surpassing THB (5.82%), AUD (5.06%), NZD (5.02%), PHP (2.64%), CNH (2.49%), IDR (-0.99%), and INR (-2.01%).

Almost on par with KRW (6.17%), MYR (6.48%) and JPY (6.54%) while underperforming TWD (7.69%) at the time of writing (see Fig. 1).

Based on technical analysis, the USD/SGD may weaken further from a long-term horizon (multi-month to multi-year) if the 1.4540 long-term pivotal resistance is not surpassed to the upside (see Fig. 2).

The price actions of the USD/SDG have broken below its former ascending trendline from the July 2011 low, and the monthly MACD trend indicator has continued to trend downwards steadily below its centreline since April 2025.

The next major supports to watch on the downside for the USD/SGD will be at 1.2340 and 1.1990.

On the flipside, a clearance above 1.3760 invalidates the bearish scenario on the USD/SGD for a possible rally to retest its long-term secular range resistance at 1.4540

Monetary Policy decisions by MAS in 2025

January 2025 Monetary Policy Decision

April 2025 Monetary Policy Decision

July 2025 Monetary Policy Decision