The Monetary Authority of Singapore (MAS) is expected to hold its benchmark interest rate at the monetary policy meeting scheduled to be held late next week with an expansionary budget unveiled on 20 February, maintaining the rate of appreciation of the SGD NEER policy band at zero percent with the width and the centerline of the policy band unchanged, Scotiabank reported.

In the past monetary policy statements, the MAS rarely adjusted the width of the band while re-centering the band only when the prevailing SGD NEER level was far away from the mid-point of the band. More importantly, the MAS have never adopted a negative slope.

Further, MAS’ core inflation decelerated to 1.2 percent y/y in February from 1.5 percent the previous month, owning to lower services and food inflation. In a statement dated March 23, the city-state’s monetary authority expected MAS core inflation to average 1-2 percent for the whole of 2017 compared to 0.9 percent the previous year.

"We would buy USD/SGD with a target of 1.43 in the run-up to June FOMC meeting, while staying with our short SGD/INR position," the report commented.