The SGD has recently faced significant headwinds following the announcement of a 10% tariff on Singapore imports by U.S. President Donald Trump. This move, part of a broader strategy targeting global economies, has heightened concerns about the potential escalation of a trade war, negatively impacting investor sentiment and leading to a depreciation in regional currencies. Analysts have noted that the SGD is closely tied to the performance of other emerging Asian currencies, which have recently struggled against the backdrop of increased trade tensions and rate cuts by several central banks aiming to spur growth.
Despite these pressures, Singapore was spared more severe tariffs due to its robust trade relationship with the U.S., the nation being Singapore’s largest trading partner, accounting for 15% of its total trade. The Monetary Authority of Singapore (MAS) actively manages the SGD's value relative to a basket of currencies from major trading partners, a strategy that helps stabilize the currency in turbulent times.
Current exchange rate movements show the SGD to USD at 0.7837, which is 1.9% above its three-month average of 0.769. This indicates a somewhat resilient performance as it traded within a range of 0.7388 to 0.7847 over the past few months. However, both the SGD to EUR and SGD to GBP are at 60-day lows of 0.6683 and 0.5712 respectively, reflecting declines of 1.4% and 0.8% from their three-month averages. The SGD to JPY stands at 113.3, 1.9% above its three-month average of 111.2, suggesting that the Singapore dollar is currently performing better against the yen compared to other major currencies.
Overall, analysts recommend keeping a close watch on future developments regarding trade negotiations, as further announcements from the U.S. could further influence the SGD's trajectory in the coming weeks.
