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What is Singapore Overnight Rate Average (SORA)?

Singapore, renowned for its robust financial infrastructure, has introduced several indices to streamline and enhance its monetary transactions. Among these, the Singapore Overnight Rate Average, or SORA, holds particular significance.

Definition of SORA

SORA is the average rate of unsecured overnight interbank SGD transactions in Singapore. It reflects the cost at which banks can borrow SGD funds overnight from other banks. As with most overnight rates, SORA is a reflection of the liquidity conditions and monetary policies in place.

How is SORA Calculated?

The calculation of SORA is predominantly based on actual transactions. The Monetary Authority of Singapore (MAS) collects data from banks about their overnight borrowing rates. These rates are then averaged to obtain the SORA for that particular day. The focus on actual transaction data ensures the rate’s accuracy and relevancy.

The Significance of SORA in Financial Markets

Benchmarking Interest Rates

SORA serves as a benchmark for various financial instruments, particularly those with floating or variable interest rates. Financial institutions might use SORA as a reference rate, adding a certain margin on top, to determine the interest rate for loans or deposits.

Impact on Loans and Financial Products

For consumers and businesses alike, understanding SORA is crucial. As it influences variable rate loans, a rising SORA can lead to higher loan repayment amounts. Similarly, some financial products might offer returns based on SORA, meaning potential gains or losses for investors based on its movement.

Comparing SORA to Other Global Rates

Globally, many financial hubs have their respective overnight rates. For instance, the US has the Federal Funds Rate, and the UK has the SONIA (Sterling Overnight Index Average). While the underlying concept remains consistent—reflecting overnight borrowing costs—each rate mirrors its nation’s economic conditions and monetary policies. When we draw a comparison, SORA’s stability and transparency have been its strength, making it a reliable barometer for Southeast Asia’s financial health.

Real-world Data Examples of SORA

Imagine a business taking a SGD 1 million loan with an interest rate defined as “SORA + 0.5%”. If SORA on a particular day is 0.8%, the interest rate for that loan on that day would be 1.3%. This dynamic adjustment ensures that both lenders and borrowers are operating on current market conditions. Another instance could be a savings account offering “SORA + 0.2%” as its interest rate. If SORA dips to 0.6%, the account holder would earn an interest of 0.8% that day.


The Singapore Overnight Rate Average (SORA) is more than just a rate—it’s an indication of the financial market’s pulse in Singapore. By anchoring various financial products and offering a real-time reflection of the interbank borrowing costs, SORA serves as an invaluable tool for both institutions and consumers. As with all financial indices, an understanding of SORA and its implications can empower stakeholders to make informed financial decisions.

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