The Singapore dollar (SGD) has recently maintained strong performance against the Philippine peso (PHP), trading approximately at 44.78, which is notably 2.2% above its three-month average of 43.8. This strength reflects a stable trend over the past months, with SGD/PHP demonstrating fluctuations within a 5.1% range between 42.65 and 44.82.
Analysts indicate that the SGD has benefited significantly from a general weakening of the US dollar, which has traded near multi-year lows. The expectation of Federal Reserve rate cuts has contributed to this trend, limiting further SGD gains, as the Monetary Authority of Singapore (MAS) manages its currency within specific bands. With the SGD nearing the upper boundary of its band, there may be limited room for additional appreciation unless there are strong shifts in US economic data or Federal Reserve signals.
Investment analysts highlight that external factors, such as recent tariffs imposed by the US, play a crucial role in shaping currency dynamics. Despite some challenging economic indicators within Singapore—including a contraction in non-oil exports and a moderation in core inflation—domestic demand for the SGD remains robust due to the country's stable capital inflows and safe-haven appeal.
Meanwhile, the Philippine peso faces potential depreciation pressure, fueled by ongoing political uncertainties and adverse trade conditions due to the imposed tariffs by the US. Analysts project that the peso may weaken against the USD in the medium term due to overvaluation and declining external balances. Additionally, the repercussions of the recent arrest of former President Duterte could heighten political risk amid upcoming mid-term elections, further complicating the economic outlook.
Overall, while the SGD is positioned strongly against the PHP, contributing factors on both sides—including monetary policy expectations and geopolitical tensions—will play a significant role in shaping future movements in this currency pair. Market participants are advised to monitor upcoming US economic data and any shifts in Federal Reserve policy, as well as developments in Philippine domestic politics, which may influence exchange rate trajectories.