Recent analysis suggests a complex outlook for the SGD to HKD exchange rate, as both currencies navigate a landscape shaped by global macroeconomic factors and regional developments.
The Singapore dollar (SGD) has demonstrated resilience, holding near decade highs against the US dollar in June, supported by expectations of Federal Reserve rate cuts and overall US dollar weakness. Analysts noted that USD/SGD traded within a tight range of 1.27–1.28, reflecting its strongest position since 2014. However, further appreciation may be limited without clearer policy signals from the Federal Reserve or shifts in market sentiment. Core inflation in Singapore eased to 0.6% year-on-year, and the revised GDP growth forecast for the year was downgraded to between 0–2%. The Monetary Authority of Singapore (MAS) has maintained a stable policy stance but indicated limited tolerance for further SGD gains given the current currency band estimates.
On the other hand, the Hong Kong dollar (HKD) has faced persistent weakness amid a widening interest rate differential with the US dollar, trading near the upper limit of its peg band at 7.85. The Hong Kong Monetary Authority (HKMA) intervened to manage this pressure, but as long as the Fed maintains a tight monetary stance, analysts warn that soft sentiment around the HKD may continue. The HKD remains under pressure from local economic challenges and capital outflows, despite some growth in Q1 GDP.
Looking at the SGD/HKD exchange rate, it has stabilized around 6.0852, which aligns with its three-month average and suggests a trading range of 3.5%. Given these dynamics, the market anticipates the SGD may hold steady against the HKD unless major shifts occur, particularly from the Federal Reserve. The interplay of US interest rate policy and local economic conditions in Singapore and Hong Kong will be pivotal in determining the medium-term outlook for this currency pair. Monitoring the upcoming US inflation data and FOMC meetings will be crucial for understanding potential forex movements.