Sticking to its guns: Find out why the MAS will keep its SGD appreciation bias

A shift is unlikely given rising labor and business costs.

According to a report released today by the Bank of America Merrill Lynch, the Monetary Authority of Singapore is likely to keep its “modest and gradual” Singapore dollar NEER appreciation bias at its October policy meeting.

The report noted that a shift is unlikely amidst rising labor and business costs in the country. Wage cost pressures remain amid a tight labor market and stricter foreign worker policy, especially given that foreign worker levies were again raised in July.

“Both unit labor and business costs are showing a strong pick-up in 2Q. Sharply higher toll fares on the JB-Singapore causeway may also increase food & other costs. In our view, the government's constructive outlook on the second half coupled with signs of further rising labor and business costs reduces the likelihood of a surprise shift to a neutral bias,” noted the report.