Singapore CPI dropped to 4% year on year, lower than the market’s expectation, due to a more moderate increase in costs of accommodation, private road transport and oil-related items.

The Monetary Authority of Singapore (MAS) lowered its forecast for core inflation to 2.5%-3% for the whole year as overall global commodity prices remain below year-ago levels, keeping domestic oil and food inflation contained.

In the past, MAS has been continuing with the policy of modest and gradual appreciation of the Singapore dollar to combat inflation. Given easing inflation and less risk of a technical recession, I think there is an increased possibility that MAS will slow the pace of SGD appreciation at its October meeting.

Below is the historical chart of SGD/USD for the past 2 years.