HKD/SGD Outlook:
Bearish, as the rate is below its recent average and near recent lows, driven by weakness in the HKD.
Key drivers:
• Rate gap: The Hong Kong Monetary Authority's interventions to support the HKD are contrasting with the more accommodative monetary policy of the Monetary Authority of Singapore.
• Risk/commodities: The stable price of Brent Crude oil is supporting the SGD, as Singapore's economy is significantly tied to global trade and energy prices.
• One macro factor: Singapore's economy has shown resilience, growing above expectations in Q4 2024, enhancing the SGD's strength against the HKD.
Range:
The HKD/SGD is likely to drift within the recent range, but pressure may keep it closer to the lower end.
What could change it:
• Upside risk: Any significant improvement in Hong Kong's economic outlook or a stronger stance from the HKMA could bolster the HKD.
• Downside risk: Further global trade tensions or sustained pressure on Hong Kong's economy could deepen weakness in the HKD.