In recent weeks, the exchange rate between the Singapore Dollar (SGD) and the Philippine Peso (PHP) has faced significant volatility due to geopolitical tensions and domestic developments in both countries. The SGD to PHP rate has reached 90-day highs near 44.64, which is 2.2% above its three-month average of 43.66, indicating a bullish phase for the SGD.
Trade relations have been a focal point in this recent movement. U.S. President Donald Trump's announcement of a 10% tariff on imports from Singapore, alongside similar tariffs on other nations including the Philippines, has raised concerns. Analysts suggest that while Singapore's economy is resilient due to strong ties with the U.S., the broader implications of escalating trade wars could dampen investor confidence in emerging markets, thereby exerting pressure on regional currencies.
The Philippines faces a particularly challenging environment. The imposition of a 17% tariff rate on goods from the Philippines as part of the same trade initiatives raises red flags for the economy, especially given ABN Amro's assessment that the PHP may depreciate further against the USD by 2025. With weaker external balances and a possibly overvalued peso, the outlook appears bleak.
The political landscape in the Philippines adds another layer of uncertainty. The recent arrest of former president Rodrigo Duterte raises concerns surrounding the upcoming mid-term elections and its effects on policy stability, which may further influence market perceptions and the PHP's performance.
Overall, analysts indicate that the SGD will likely maintain a stronger position against the PHP in the short term, driven by Singapore's stable economic fundamentals and the ongoing pressures faced by the Philippine currency amid geopolitical and domestic challenges. For individuals and businesses engaging in international transactions, monitoring these developments could be crucial for optimizing currency exchange strategies moving forward.