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Singapore Dollar: How much stronger can the SingDollar get?

Singapore Dollar: How much stronger can the SingDollar get?

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Not content with outperforming its regional counterparts, the Singapore dollar has closed higher against the US Dollar in 7 of the last 8 trading sessions. At the time of writing, USD/SGD is doing business at S$1.38820, just above Friday’s three-week low of S$1.38540.

The Singapore Dollar is up +1.5% v.s the greenback since the middle of July. At last count, USD/SGD has narrowed the 2022 deficit to just -2.6%, recovering from the 2022 low set earlier this month. This year, the currency has fared better than many of its closet neighbors, strengthening to record levels against the Japanese yen and the Malaysian Ringgit.

The gains come hot on the heels of a surprise announcement from the Monetary Authority of Singapore (MAS). The MAS shocked the market by tightening monetary policy in an off-cycle move on July 14. The measure — the central bank’s fourth since October — follows Canada’s surprise 100 basis point hike and 50bp hikes from New Zealand and South Korea in July.

IMF Cuts Growth Outlook

A report released on July 22 shows the International Monetary Fund (IMF) has cut its growth forecasts for Singapore. The organization expects Singapore’s economy to grow 3.7% this year — down from the 4% estimate released in May. Despite the downgrade, the report praised Singapore’s handling of the covid vaccine, saying:

Singapore’s skillful containment measures, effective vaccination campaign and decisive policy support helped the economy to recover impressively,

The fund cited rising inflation, the war in Ukraine, and China’s slowdown as potential headwinds for growth going into 2023.

US Dollar to Singapore Dollar Exchange Rate

Although the USD/SGD exchange rate has pulled back over the last two weeks, it remains in a longer-term uptrend. Notably, the pair is changing hands just above the 50-Day Moving Average (DMA) at S$1.38733. Technical traders consider DMAs as important levels of buying and selling interest. Therefore, we should expect the price to see some support around this area. Below the 50 DMA, a rising trend line from mid-April offers support around the S1.38400 mark.

Considering the downgrade from the IMF, and the significant technical support, we may see USD/SGD buyers emerge over the coming days. However, a close below the trendline suggests the Singapore dollar will continue to appreciate in the near-term. Here, a potentially target is the S$1.37000-1.38000 range.

USD/SGD Price Chart

US Dollar to Singapore Dollar
Elliot Laybourne
Elliott is a former investment banker with a 20 year career in the city of London. During this time he held senior roles at ABN Amro, Societe Generale, Marex Financial and Natixis bank, specialising in commodity derivatives and options market-making. During this time, Elliott’s client list included Goldman Sachs, JP Morgan, Credit Suisse, Schroders Asset Management, and the Pennsylvania State Public School Employees Retirement System, amongst others. Today, he splits his time between Thailand and Dubai, from where he provides trading consultancy and business development services for family office and brokerage clientele.