SORA has been drifting lower lately, even though the U.S. Fed hasn’t cut rates. The move is largely about Singapore-specific liquidity and foreign exchange dynamics, rather than a direct read-through from the Fed.
What’s pushing SORA down
- Plenty of SGD liquidity and safe-haven inflows
Capital continues to flow into Singapore’s AAA-rated, stable market. When banks are flush with SGD, they’re more willing to lend overnight at lower rates, which pulls SORA down. - MAS FX operations and liquidity management
When the SGD strengthens, MAS may lean against it in the FX market. Selling SGD (to temper appreciation) adds SGD liquidity to the system. If that liquidity isn’t fully mopped up, it puts gentle downward pressure on SORA. - Forward FX hedging and covered interest parity
Banks and global investors hedge via USDSGD forwards. Pricing in the forward market reflects interest-rate differentials. Heavy SGD-forward supply can nudge implied short-term SGD rates lower, filtering into SORA.
At a glance
| Factor | What it does to 1M SORA |
|---|---|
| Plentiful SGD liquidity | Lowers overnight borrowing costs |
| MAS FX interventions | Adds market liquidity |
| Forward FX hedging dynamics | Pulls implied SGD rates down |
Market expectations matter
Markets are leaning toward slower global growth and lower inflation ahead. That shows up in forward rates and tends to tug shorter-tenor benchmarks (like 1M SORA) down faster than longer tenors.
Inflation has cooled locally
Singapore’s inflation has come off the 2022–2023 highs. With core inflation hovering around MAS’s comfort zone (~2%+), there’s less upward pressure on local money-market rates.
Why 1M SORA fell more than 3M
Short tenors react first to liquidity swings and shifting rate expectations. Three-month SORA still embeds uncertainty about the months ahead, so it typically sits a little higher. That’s why you might see 1M SORA around ~1.3% while 3M SORA hovers nearer ~1.5%.
Bottom line
Even with the Fed on hold, 1M SORA has eased to roughly ~1.3% on the back of domestic liquidity, MAS’s FX-related flows, and forward-hedging effects, factors that are only loosely tied to U.S. policy.
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