The Monetary Authority of Singapore tightened its monetary policy on Monday for the second time in three months as global energy market volatility keeps inflation risks high across the region.
The central bank announced that it will increase the rate of appreciation of the Singapore dollar against a basket of currencies of its main trading partners.
The decision comes as sustained tension in the Middle East continues to keep international oil and gas prices elevated, threatening to push up domestic consumer costs.
Because the island state relies almost entirely on imports for its food and energy needs, rising global prices feed directly into everyday living expenses for local households.
Unlike most central banks that adjust benchmark interest rates, the Monetary Authority of Singapore manages domestic price stability by adjusting the local exchange rate within an undisclosed trading band.
Allowing the Singapore dollar to strengthen helps cushion the domestic economy against escalating imported costs.
Central bank officials warned in a statement that imported costs for the country are likely to rise further in the coming quarters.
The authority noted that core inflation is expected to increase from July and remain elevated well into early next year.
Policymakers cautioned that inflation could rise faster than expected if Middle East supply disruptions lead to fresh spikes in global crude prices, particularly as commercial fuel reserves have fallen significantly.
Monday's policy adjustment follows a previous tightening move in April, which was the first such intervention by Singaporean authorities since 2022.
