The recent exchange rate forecasts for the Singapore Dollar (SGD) to Chinese Yuan (CNY) reflect a complex interplay of monetary policies, economic performance, and external pressures.
Analysts note that Singapore's central bank, the Monetary Authority of Singapore (MAS), adjusted its monetary policy in January 2025 by reducing the slope of its exchange rate policy band. This change, intended to support economic growth in light of lower core inflation expectations, could lead to a gradual depreciation of the SGD. Although the MAS maintained its policy settings later in October, citing stronger-than-expected economic growth of 2.9% year-on-year in Q3, the earlier adjustments raise concerns about potential weakness for the SGD amid a robust global economic outlook.
On the other hand, the CNY has shown resilience, with state-owned banks actively purchasing U.S. dollars to manage the yuan's appreciation. This strategic intervention aims to control the yuan's rise, particularly as investment firms forecast a strengthening of the yuan beyond the 7 CNY per USD mark in 2026 due to narrowing yield differentials and improving trade relations. The People's Bank of China (PBOC) has also emphasized a focus on domestic demand and stability in monetary policy to prevent significant depreciation, which could further bolster confidence in the CNY.
The SGD/CNY exchange rate has recently dipped to a 14-day low of 5.4443, moving within a narrow 2.1% range against its three-month average of 5.4788. The observed stability in this currency pair suggests that both currencies are influenced by their respective central banks' policies and external economic factors, including trade tensions, which have historically pressured the SGD.
Considering the developments from both Singapore and China, experts believe that the SGD may face headwinds against the CNY if MAS continues to adopt easing measures while the CNY strengthens. Investors and businesses engaged in international transactions should stay informed about these dynamics to optimize their currency exchange strategies, as future rate directions are likely to hinge on ongoing economic data and policy responses from both regions.
