USD/SBD Outlook: Likely to decrease as the rate is below its recent average and near recent lows, facing pressure from current developments.
Key drivers:
- Rate gap: The Federal Reserve's expected additional rate cuts are weakening the US dollar relative to the Central Bank of Solomon Islands, which is pursuing monetary policies to support growth.
- Risk/commodities: Ongoing geopolitical tensions have introduced volatility, negatively impacting demand for USD, making it less attractive for investors.
- One macro factor: The Solomon Islands’ approved national budget aimed at fostering economic growth is likely to support the SBD in the face of USD weakness.
Range: The USD/SBD rate is expected to drift slowly lower, staying within its recent stable range.
What could change it:
- Upside risk: A surprising stabilization in US economic data or resolution of geopolitical tensions could support a stronger USD.
- Downside risk: Further escalation of geopolitical conflicts or disappointing US job data could push the USD/SBD lower.