Executive Summary
The Singapore Dollar trades at USD/SGD 1.2860 against a backdrop of extraordinary macro dislocation. Operation Epic Fury — the Iran-US war that began February 28, 2026 — has closed the Strait of Hormuz, driven Brent crude from $71 to $111/bbl (+55% in March alone), and doubled Asia JKM LNG prices to $22.73/MMBtu. For Singapore — a net energy importer that sources ~50% of its LNG from Qatar — this is an acute terms-of-trade shock colliding with what was the strongest GDP print in four years (+6.9% YoY in Q4 2025). MAS Core Inflation has already inflected higher to 1.4% in February from a 0.4% trough in mid-2025, and the energy shock will accelerate this trajectory materially. The April 2026 MAS policy review (due by April 14) is the pivotal near-term catalyst: 47.4% of professional forecasters expected tightening (steeper S$NEER appreciation slope) before the war began, and that hawkish consensus has only intensified. The central tension is that SGD's formidable structural advantages — AAA sovereign ratings, a ~19% of GDP current account surplus, record-high fiscal reserves, and regional safe-haven status — are being tested by a once-in-a-generation energy supply shock that could transform a manageable inflation pickup into a stagflationary episode if Hormuz remains closed beyond Q2 2026. Our stance is Bullish SGD tactically (2–4 weeks) on an imminent hawkish MAS tightening and safe-haven demand, and Bullish SGD strategically (1–6 months) conditional on conflict de-escalation restoring the pre-war appreciation trend toward the consensus 1.24–1.26 range. Current spot at 1.2860 sits approximately 3–5% above the pre-war trajectory, representing the war risk premium available for capture.