The SGD to TWD exchange rate has shown resilience recently, influenced by a combination of domestic economic factors and broader market sentiment. As of late September 2023, the SGD traded around 23.03 TWD, which is slightly below its three-month average and has remained stable within a 4.5% range from 22.62 to 23.63. Analysts note that the Singapore dollar has maintained its strength, aided by US dollar weakness and the potential for rate cuts from the Federal Reserve.
Despite this strength, further appreciation of the SGD could be limited. According to recent forecasts, any significant move would depend on more decisive dovish signals from the Fed or a shift in overall market sentiment. The Monetary Authority of Singapore (MAS) has kept its policy steady, noting that the SGD's nominal effective exchange rate is at the upper boundary of its managed band. This positioning suggests that the MAS may act to prevent further appreciation should the USDSGD approach critical technical support near 1.27.
On the other hand, the Taiwan dollar is showing signs of vulnerability, particularly due to external pressures such as the 32% reciprocal tariff imposed by the US as part of ongoing trade tensions. The potential for a global tech slowdown could also weigh on the TWD, given Taiwan’s heavy reliance on its technology sector. Heightened geopolitical tensions with China further exacerbate uncertainty surrounding the TWD.
Overall, the SGD is expected to remain relatively strong against the TWD in the short term, given Singapore's stable economic environment and its strategic trade relationships, while the TWD faces headwinds due to external tariffs and geopolitical instability. Market participants should closely monitor developments from the Federal Reserve and any shifts in the regional economic landscape that could impact these currencies in the coming months.