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The Singapore government’s SGD900mn second support package, announced on July 29, complemented the Monetary Authority of Singapore (MAS)’s decision earlier this week to very slightly increase the appreciation pace of the Singapore dollar nominal effective exchange rate (SGD NEER) policy band. Building on the earlier SGD1bn first support package unveiled in early April, these measures marked co-ordinated efforts by Singapore’s policymakers to address rising inflation and cost pressures stemming from unsettled tensions in the Middle East, while acting from a position of economic strength.
We expect the SGD NEER’s annual appreciation to return into the 2026 official inflation forecast range of 1.5-2.5%, broadly dampening imported price pressures given mildly restrictive policy, even as the July monetary tightening was more measured than that in April (see ‘Singapore: A calibrated MAS tightening’). In contrast, the second government support package was more targeted in nature when also compared to the first tranche. Two-thirds of the funding will provide continued crucial relief to households through additional CDC vouchers, enhanced utilities rebates, and assistance for low-income households. Calibrated cashflow support was also delivered to small and medium-sized enterprises (SMEs), including the introduction of a new one-off SME Cash Grant, and improved access to financing through the enhanced Enterprise Financing Scheme, aiming to alleviate a key pain point. In addition, the income statements of stallholders in hawker centres and markets would benefit from rental support, which provides cost relief, while additional CDC vouchers would support their revenues to some extent. With geopolitical and economic uncertainties persisting, Singapore’s strong fiscal position stands out among global and regional peers, which we believe should help sustain continued investor confidence and attract further capital inflows.
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The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.
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