The Singapore dollar (SGD) has recently maintained its position near decade highs against the US dollar (USD), trading around 1.27–1.28 in June, which is the strongest level observed since 2014. This strength can largely be attributed to continuing weakness in the greenback, as investors anticipate potential rate cuts by the Federal Reserve, compounded by uncertainty surrounding upcoming US tariffs.
The US's decision to impose a baseline 10% reciprocal tariff on goods from Singapore has added an additional layer of complexity to the situation. Despite this, Singapore's status as a trade partner for the US—accounting for 15% of the city-state's total trade—has enabled it to avoid harsher tariffs, supporting the SGD's relative stability.
Recent market reports indicate that the SGD is currently trading at 0.7797 to the USD, reaching a 7-day high that positions it slightly above its 3-month average. Conversely, the SGD has shown some weakness against the Euro (EUR), trading at 0.6677, which is 1.1% below its recent average. In the case of the GBP, the SGD is at 14-day lows near 0.5796, while it remains stable against the Japanese yen (JPY) at 114.5, just slightly above its average.
Analysts have noted that the Monetary Authority of Singapore (MAS) has not adjusted its policy following an easing in April, and the SGD nominal effective exchange rate (S$NEER) is now assessed to be near the upper boundary of its policy band. This positioning limits the likelihood of further appreciation unless there are decisive dovish shifts from the Fed or significantly weaker US economic data.
Looking forward, the outlook for the SGD will likely depend heavily on upcoming macroeconomic data, particularly the US Consumer Price Index (CPI) and signals from the forthcoming Federal Open Market Committee (FOMC) meeting. The potential for a rebound in the USD-SGD pair remains, particularly if market sentiment shifts, but current technical thresholds suggest that the SGD might face challenges in further strengthening. Observers will be closely watching how geopolitical tensions and trade dynamics evolve, as these factors will influence both the SGD and broader Asian currency sentiment.
