SGD/TWD Outlook:
Slightly positive, but likely to move sideways as the rate is above its recent average but lacks a clear driver.
Key drivers:
- Rate gap: The Monetary Authority of Singapore is adopting a more accommodative monetary policy while Taiwan's Central Bank allows the TWD to strengthen, leading to a widening gap in policy stance.
- Risk/commodities: Recent fluctuations in global oil prices have not significantly impacted SGD and TWD, maintaining stability with little volatility in their exchange rates.
- One macro factor: Singapore's economy demonstrated growth of 5% in Q4 2024, outpacing expectations, which has supported the SGD's performance.
Range:
Expect movement to hold within the recent range, given the current levels and steady economic indicators from both regions.
What could change it:
- Upside risk: An improvement in U.S.-China trade relations could bolster the TWD's strength further, impacting SGD/TWD positively.
- Downside risk: A quick deterioration in Singapore's export competitiveness due to the new U.S. tariffs could weaken the SGD against the TWD.