SINGAPORE: According to experts, the relative strength of the Singapore dollar perhaps decline over the upcoming months as a result of the US economy’s smooth landing.
The main reason the Singaporean dollar recently reached 10-year highs in relation to the dollar was the US dollar’s weakness, they continued.
The Singapore dollar recently hit levels last seen in 2014 against the US dollar, according to Bloomberg ( Aug 23 ). It has traded near 1.30 against the US dollars this year, compared with 1.337 at the start of August and 1.358 in first July.
If financial data indicates that the US can prevent a crisis, the US dollar was reestablish some power, said Mr Sim Moh Siong, a dollar strategist at Bank of Singapore.
” We are still in the non-recession camp”, he said. We believe that the market has gotten a long way forward of itself when it is predicting a rapid price increase.
Higher-yielding Asian economies will increase, according to Mr. Peter Chia, a mature FX strategist at UOB.
UOB anticipates that the Monetary Authority of Singapore ( MAS ) will moderately ease the appreciation of the Singapore dollar’s nominal effective exchange rate ( S$ NEER ) in October.
” The SGD’s power relative to local currencies may comfortable in the approaching times”, Mr Chia said.
Charge CUT EXPECTATIONS
According to Mr. Manpreet Gill, Standard Chartered’s chief investment officer for Africa, Middle East, and Europe, the US dollar fell as interest rates were priced in response to subpar information.
He added that Federal Reserve chair Jerome Powell’s remarks at the Jackson Hole Economic Symposium , past week , were friendly of a price cut.
According to Mr. Gill,” the latest move has probably been very much centered on shifting rate expectations for the USD alone.”
A momentary decline below 1.30 for USD/SGD would not be shocking in the near future, according to Mr. Chia of UOB,” Gauging from the speed.”
There are only three sessions left in 2024, according to Mr. Sim of the Bank of Singapore, and the market is presently anticipating rate reductions of 100 base items for the remainder of the year.
The business anticipates a larger-than-normal slice of 50 base items at one of the meetings this year because the US Federal Reserve typically moves 25 basis points at once.
” What’s changed is that the businesses are now anticipating a much more aggressive pace of easing because of US crisis issues,” said Mr. Sim.
He claimed that the market’s fear was heightened by the labor market record, and that market expectations may be influenced by the upcoming report, which is scheduled for early September.