Bias: The SGD/VND is currently bullish-to-range-bound as it sits above the 90-day average and in the upper half of its 3-month range.
Key drivers:
- Rate gap: The Monetary Authority of Singapore is easing its monetary policy, contrasting with the Vietnamese government's cautious approach to expand monetary policy amidst economic challenges.
- Risk/commodities: With Brent Crude OIL/USD prices performing strongly, the SGD could strengthen, benefiting from Singapore's position as a major trading hub.
- One macro factor: IMF approval for the Vietnamese Đồng's revaluation is expected to boost Vietnam's economic dynamics and trade relations, impacting the VND.
Range: The pair is likely to drift within its stable 3-month range, influenced by the recent monetary policy adjustments.
What could change it:
- Upside risk: A stronger-than-expected GDP growth in Singapore could lead to further SGD appreciation.
- Downside risk: If the U.S. Federal Reserve's rate cuts lead to increased USD strength, it could negatively affect the VND's performance.