Asia FI & FX Strategy Viewpoint: SGD: Is small still beautiful in a fragmented world?

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Asia FI & FX Strategy Viewpoint: SGD: Is small still beautiful in a fragmented world?

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Asia FI & FX Strategy Viewpoint

SGD: Is small still beautiful in a

fragmented world?

“A nation is not great by its size alone” 24 July 2026

Existentialist challenges are nothing new to Singapore. Back in 1963, PM Lee Kuan GEM FI & FX Strategy

Yew’s Malaysia Solidarity Day speech emphasized the need for disciplined governance, Asia

economic openness and endurance, to achieve long-term stability and prosperity, Claudio Piron

notwithstanding Singapore’s small size. Singapore is once again facing a challenging Emerging Asia FI/FX Strategist

future; this time in a fragmented multi-polar world. Merrill+65 6678Lynch0401(Singapore)

claudio.piron@bofa.com

Monetary policy credibility still matters Kai Wei Ang

Maintaining inflation and currency stability is one of three key policy pillars that has ASEANMerrill LynchEconomist(Singapore)

sustained Singapore’s prosperity. We show how this credibility is maintained by +65 6678 5518

kaiwei.ang@bofa.com

applying a Taylor Rule. Exhibit 1, below, shows policy remains credible for the next 6

months, but risks are building that further slope appreciation will be needed by year-end.

Singapore’s record wide 10yr yield gap below US yields, reflects long-term inflows MAS: Monetary Authority of

Singaporeunderpinned by monetary credibility, fiscal discipline and consequential fiscal space for

critical investment such as defense and environmental climate change protection. y-o-y – year on year

Fiscal space and trade re-orientation keys to longevity FDI: Foreign Direct Investment

Nonetheless, indicators of globalization appear to be plateauing see (Exhibit 13),