Forecasts for USD to SGD
The USD to SGD exchange rate has recently experienced downward pressure, with the USD trading near 90-day lows at approximately 1.2996, which is 2.6% below its three-month average of 1.334. Analysts point out that this situation has emerged despite recent hopes for a resolution to US-China trade tensions, buoyed by statements from US Treasury Secretary Scott Bessent expressing confidence in achieving a trade deal. However, amidst these developments, the US dollar faces significant risks.
Concerns are growing within financial markets about potential recessionary indicators and the implications of President Trump’s tariff strategies, which include a 10% import tariff on Singaporean goods. The tariffs are part of Trump’s broader approach to addressing trade imbalances, which could spark further volatility in the dollar's value and regional currencies, including the SGD. Economists observe that the announcement has rekindled fears of a global trade war, sending emerging Asian currencies, including the SGD, into a decline as investors reassess their risk appetite.
Market sentiment has also been shaped by the expectations surrounding upcoming economic data, especially the April non-farm payrolls report. A sharp slowdown in job creation could deepen the existing concerns surrounding US economic performance and dampen the dollar's strength further. As the Federal Reserve's monetary policy plays a critical role in determining the dollar's outlook, any dovish indications could exacerbate the current trend, leading to a further weakening of the USD against the SGD.
The Monetary Authority of Singapore (MAS) manages the SGD against a basket of currencies from its major trading partners, and despite the recent tariffs, Singapore's strong trade relationship with the US—being its largest trading partner—could provide some resilience. However, analysts warn that unless the overall sentiment towards US trade policies improves, the SGD may continue to face downward pressure, leading to potential depreciation against the USD in the near term. Overall, the interplay between trade relations, economic indicators, and geopolitical shifts will remain pivotal in shaping the USD to SGD trajectory in the coming weeks.
