The recent exchange rate forecasts for the Singapore dollar (SGD) against the Saudi riyal (SAR) reflect a relatively stable currency environment influenced by ongoing developments in both economies. In June, the SGD maintained its strength near decade highs, primarily driven by a weaker US dollar and safe-haven demand amid escalating trade concerns. Analysts observe the SGD trading at around 2.9081 SAR, which is just below its three-month average. The exchange rate has remained within a 2.7% range, reflecting a stable market sentiment.
Market experts indicate that the SGD's resilience is supported by expectations concerning Federal Reserve policy and the broader economic context. The Monetary Authority of Singapore (MAS) continues to manage the SGD against a basket of currencies, and with the S$NEER estimated at the upper end of its band, further appreciation may be limited unless the Fed adopts a decidedly dovish stance. Any potential strengthening of the USD could lead to caution, especially with the upcoming US CPI data and the Federal Open Market Committee's (FOMC) meeting on the horizon.
As for the Saudi riyal, it remains fixed against the US dollar, which provides a predictable currency environment. This peg means that any significant fluctuations in the SGD/SAR exchange rate will likely be influenced more by changes in the SGD's strength than by movements in the SAR.
Analysts deem that potential risks to the SGD/SAR rate include shifts in market sentiment stemming from US-China trade tensions or further adjustments in US monetary policy. If risk sentiment pivots or data indicates a more robust recovery in the US economy, the pair could see modest fluctuations towards the 1.29–1.30 range. Overall, while the SGD exhibits strength, it faces constraints that may limit further gains against the SAR in the short term.