Bias: The SGD/SAR pair is bullish-to-range-bound, as it is slightly above the 90-day average and in the upper half of the 3-month range.
Key drivers:
- Rate gap: The Monetary Authority of Singapore's recent shift towards a more accommodative policy could widen the interest rate differential favoring the Saudi Riyal over the Singapore Dollar.
- Risk/commodities: With oil prices currently near their average levels, the stability in oil may support the Riyal's peg to the U.S. dollar while keeping the SGD resilient as Singapore navigates its trade challenges.
- Economic growth outlook: Singapore's moderate GDP growth expectation reflects a careful balance between stimulating the economy and managing inflation.
Range: The SGD/SAR is likely to hold within its recent range, with potential fluctuations but neither pushing to the extremes.
What could change it:
- Upside risk: A significant improvement in global trade conditions could boost demand for the Singapore Dollar.
- Downside risk: A worsening of global economic conditions could lead to aggressive monetary easing by the MAS, weighing on the SGD.