From the headlines: “MAS may relax monetary policy due to declining inflation: analysts“ (CNA 24 Sep) and “Price rises slow to lowest in almost two years” (Straits Times 25 Sep) – it looks like a depreciation of the S$ is in the works.
The S$ has appreciated quite a bit since the beginning of the month, with the USD/SGD rate falling from 1.25 to under 1.23. I suspect that with QE3 and possible bailouts coming in the Eurozone, if nothing was done to the currency policy band, S$ will continue to appreciate, which will make Singapore less competitive.
The fall in S$ will result in increased interest rates, though it will probably be moderate, given the mandate to keep interest rates low. It will make properties here cheaper to foreigners, and will likely prop up the property market here and enrich the government’s coffers.
As a side note, if you read the headlines carefully, they are saying that inflation is happening less aggressively but on-going, and prices are still going up. If and when the S$ falls, however gradually it may be done, it will eventually translate into higher food and transport bills.