Regional FX moves: MAS, Indonesia and baht history

Singapore tightened monetary policy on April 14, letting its currency strengthen faster as imported energy costs pushed up the inflation outlook. (channelnewsasia.com) The Monetary Authority of Singapore said it would “increase slightly” the rate of appreciation of its Singapore dollar nominal effective exchange rate policy band, while keeping the band’s width and center unchanged. It also raised its 2026 forecasts for both core and headline inflation to 1.5% to 2.5%, up from 1% to 2%. (channelnewsasia.com) Singapore runs policy through the exchange rate rather than a benchmark interest rate, so a steeper policy band means the Singapore dollar can rise faster against a basket of trading-partner currencies and make imports cheaper. Monetary Authority of Singapore officials said the move came as Middle East conflict added volatility to energy prices and supply. (channelnewsasia.com) Indonesia has been moving in a different but related channel: settling more cross-border trade in local currencies instead of routing payments through the United States dollar. Bank Indonesia said local-currency transactions reached $11.7 billion in the first half of 2025, up from $4.702 billion a year earlier. (bi.go.id) Bank Indonesia Deputy Governor Filianingsih Hendarta said on July 25, 2025 that the average number of local-currency settlement customers rose about 45% from a year earlier. The central bank also said it added South Korea in September 2024 and the United Arab Emirates in January 2025 as partner countries for the framework. (bi.go.id) The same release said Indonesia expanded existing arrangements with Malaysia and Thailand in March 2025 to cover portfolio investment, not just trade and direct investment. Officials framed the program as a way to steady the economy against exchange-rate swings and geopolitical shocks. (bi.go.id) Thailand sits in the background of both debates because the region still measures currency stress against earlier devaluations. A Federal Reserve history of the Asian financial crisis says Thailand devalued the baht on July 2, 1997 after months of speculative pressure had drained foreign-exchange reserves. (federalreservehistory.org) Long before 1997, Thailand had already used devaluations in the 1980s. A Thammasat University lecture on the Thai economy says the baht was devalued by 1.1% in May 1981, 8.7% in July 1981, 14.9% in November 1984, and 1.9% in December 1985. (be-moodle.econ.tu.ac.th) Those episodes are not the same policy as Singapore’s managed appreciation or Indonesia’s local-currency settlement push. But they all turn on the same lever: governments and central banks in Southeast Asia are still actively managing how exchange rates feed into inflation, trade, and financial stability. (channelnewsasia.com) (bi.go.id) (federalreservehistory.org)