SGD/CNY Outlook:
Slightly positive, but likely to move sideways as the rate is near its recent average and lacks a strong driver.
Key drivers:
- Rate gap: The Monetary Authority of Singapore has adopted a more accommodative stance, while the People's Bank of China is stimulating credit in key sectors to support growth.
- Risk/commodities: Current oil prices have stabilized, which generally supports the SGD as Singapore relies on oil imports and its refined products.
- One macro factor: The reduction in US tariffs on goods from Singapore later this year might provide slight relief to the Singapore economy and positively impact the SGD.
Range:
The SGD/CNY is expected to hold within its recent range, showing little volatility.
What could change it:
- Upside risk: A significant improvement in China's economic data could lead to stronger demand for the CNY.
- Downside risk: Further US trade tensions could negatively impact Singapore's economy, placing downward pressure on the SGD.
