Impact of Middle East Conflict, Singapore Pushes for Exchange Rate Strengthening

JAKARTA, KOMPAS.com – The Monetary Authority of Singapore (MAS) has decided to tighten its monetary policy in April 2026. This comes amid rising inflation risks and global economic uncertainties. In its latest monetary policy statement on Tuesday (14/4/2026), MAS stated it would slightly increase the rate of appreciation of the Singapore dollar nominal effective exchange rate (S$NEER). This step marks a policy direction change after the Singapore monetary authority had maintained its policy stance for several periods. The adjustment to the slope or inclination of the policy band means the Singapore dollar exchange rate will be allowed to strengthen more quickly than before. Citing Channel News Asia, this increase in the slope makes the Singapore currency tend to appreciate, which in turn can suppress import prices. MAS emphasised that this policy is taken to maintain price stability in the medium term, amid high ongoing external uncertainties. “MAS is well-positioned to respond effectively to any risks to medium-term price stability and will continue to closely monitor economic developments amid the uncertain external environment,” said MAS. This decision to tighten monetary policy is not unrelated to projections of rising inflation in Singapore in 2026. Price pressures are expected to come from both external and domestic factors. Several reports mention that global geopolitical conflicts, particularly in the Middle East region, are also triggering rises in energy prices and worsening global supply chains. This condition is one of the main factors driving the central bank to take a pre-emptive step through exchange rate strengthening. Data shows that Singapore’s core inflation was in the low range in 2025, but is expected to rise again in 2026.