Singapore Dollar Stabilizes Amid Focus on Upcoming Federal Reserve Rate Decision

On December 4, 2025, the Singapore dollar (SGD) remained steady against the U.S. dollar (USD) during the Asian trading session, with the USD/SGD pair trading within a narrow range of 1.2931 to 1.2969 and closing near 1.2962 (+0.04%) by 8:20 PM GMT [2]. This stability aligns with broader trends in Asian currencies, which have maintained gains amid firm expectations of a Federal Reserve (Fed) interest rate cut [4]. The CME FedWatch Tool estimates an 87% probability of a 25-basis-point Fed rate cut at the December 10, 2025, FOMC meeting [5], a consensus strengthened by cooling U.S. economic conditions—including fifteen consecutive months of contraction in the ISM Manufacturing PMI (46.5 in November) and rising weekly jobless claims (235,000) [8]. These factors have fueled market optimism for reduced USD strength, as investors may shift capital to higher-yielding assets in emerging markets like Singapore.

1. Fed Policy as a Dominant Driver
   : The SGD’s steady performance is largely a result of market caution ahead of the Fed’s rate decision, with investors avoiding significant bets until policy clarity emerges [1].
2. Regional Currency Correlation
   : The SGD’s stability mirrors trends in other Asian currencies, which are collectively supported by expectations of Fed rate cuts, highlighting the interconnectedness of regional currency markets [4].
3. Data-Driven Sentiment
   : The high probability of a Fed cut (87%) is rooted in tangible economic indicators, including cooling inflation and moderating wage growth [6, 7], indicating that market sentiment is not purely speculative.

• A Fed decision to forgo a rate cut could trigger sudden USD strengthening against the SGD and other Asian currencies, disrupting the current stable trading environment [0].
• Volatility in global oil prices and geopolitical tensions may also impact the SGD, given Singapore’s role as a major financial hub and oil refining center [0].
• A stronger-than-expected U.S. non-farm payroll report (scheduled before the FOMC meeting) could reduce the probability of a Fed cut, further pressuring the SGD [0].

• A Fed rate cut could weaken the USD, potentially strengthening the SGD and making Singaporean assets more attractive to global investors [4].
• Continued regional currency stability may support Singapore’s trade and financial sector, which is sensitive to exchange rate fluctuations [1].

• Exchange Rate Data
  : USD/SGD traded within a narrow range of 1.2931–1.2969 on December 4, 2025, closing near 1.2962 (+0.04%) [2].
• Fed Rate Cut Probability
  : 87% chance of a 25-basis-point cut at the December 10, 2025, FOMC meeting [5].
• Key Economic Indicators
  : Cooling U.S. manufacturing activity (ISM PMI 46.5) and rising jobless claims (235,000) [8] are driving Fed cut expectations.
• Monitoring Factors
  : The Fed’s rate decision and accompanying statement, U.S. non-farm payroll data, Monetary Authority of Singapore (MAS) policy stance, and Singapore’s domestic economic indicators (inflation, growth) [0].