logo
How the Singapore dollar could perform against the US dollar this year

How the Singapore dollar could perform against the US dollar this year

Business Times09-05-2025

[SINGAPORE] Fading US exceptionalism could pave the way for further appreciation of the Singapore dollar against the greenback, said analysts.
The Singdollar surged to around 1.29 per US dollar on Monday (May 5) – a level not seen since September 2024. That drove its year-to-date gain to about 5 per cent, with its five-day gain at around 1 per cent.
Among other Asian currencies, the Taiwan dollar surged to highs not seen in over 30 years, while the Malaysian ringgit and safe-haven Japanese yen also strengthened. On Friday morning during Asia trade, the US dollar/Singapore dollar was last at 1.30.
Asian currencies jumped as the US dollar weakened on worries that the tariff war could hurt the US economy. However, Donald Trump has suggested the US may strike trade deals with some countries as soon as this week.
Amid the uncertainty, in the short term till the end of 2025, analysts expect the Singdollar to further appreciate against the greenback and hover within the 1.26 to 1.29 range. The broader trajectory points to continued strength against the US dollar.
As global investors pull back from the US dollar, the Singdollar is emerging as a resilient alternative, said Saktiandi Supaat, Maybank head of FX research.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
'The Singapore dollar can continue to appreciate against the US dollar as US exceptionalism fades and a broad diversification on a flight to quality away from the US dollar continues,' he said.
He added that the Monetary Authority of Singapore's policy stance is also responsible for the steady appreciation of the Singapore dollar.
Saktiandi said that the city-state's stability and strong fundamentals – including a strong reserves position and credible central bank policy – make its currency a more attractive option when markets look for alternatives to the greenback.
The strengthening of the Singdollar has been supported by improved regional sentiment, which ANZ Research attributes to easing tariff concerns amid trade talks between US and its trading partners.
'More fundamentally, we continue to question US dollar's status as a primary reserve currency and a safe haven… (as) the rise in US protectionist measures have significantly heightened economic policy uncertainty,' says Christopher Wong, OCBC FX strategist.
The analyst, however, posited that the overshoot in the Singdollar for the last few days is 'due for correction' now that market activity has started picking up.
He said the US Federal Reserve keeping rates steady on Wednesday supports the US dollar, and a near term rebound for the Singdollar back to 1.31 per US dollar 'should not be ruled out'.
'As a result, traders may start closing out their previous bets against the US dollar. Unless there is a new reason for the US dollar to weaken further, we can expect the USD/SGD exchange rate to stabilise and possibly drift slightly higher,' Wong added.
Tariff impact
Philip Wee, DBS' senior FX strategist noted that countries should focus on ensuring continued access to the US market rather than currency competitiveness.
'Singapore's primary concern about US tariffs lies more in their secondary impact – how global trade disruptions and weakening external demand could weigh on its export-driven economy,' Wee said.
He added that Trump's approach to fixing global imbalances – using tariffs as leverage in trade negotiations – undermines the trade recycling system that has historically financed US deficits in the US dollar-centric global economy and financial system established after World War II. The shift, he suggested, is starting to have far-reaching implications.
Wee cited the Taiwan dollar's sharp gains on May 2 and May 5 as a sign of growing caution among Asian exporters and institutional investors, who are concerned about potential losses on their US dollar-denominated earnings and assets amid fears of a broader confidence crisis in the US dollar.
Beyond tariffs, Wee highlighted uncertainty around the Trump administration's proposed tax reforms and financial sector deregulation, both of which could introduce further volatility to the global financial system.
While global financial systems face potential disruption, Singapore appears to be holding steady.
'Singapore dollar rates have been falling with Singapore Government Securities, one of the best performing sovereign debt in the world,' Saktiandi added. 'In uncertain times like these, we would suggest that is a testament to Singapore's strengths.'

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Shares stumble after Trump's latest trade threat
Shares stumble after Trump's latest trade threat

CNA

timean hour ago

  • CNA

Shares stumble after Trump's latest trade threat

HONG KONG: Investors were rattled on Thursday (Jun 12) after Donald Trump said he would impose unilateral tariffs on partners in the next two weeks, reigniting trade war fears soon after reaching a deal with China to dial down tensions between the superpowers. The mood was also shaded by geopolitical concerns after the US president said personnel were being moved from the Middle East as nuclear talks with Iran faltered and fears of a regional conflict grew. The equity losses snapped a recent rally fuelled by talks between Beijing and Washington in London that saw them hammer out a framework agreement to move towards a pact to reduce levies. Investors have been on edge since Trump's "Liberation Day" tariff blitz on Apr 2 that sent shockwaves through stock and bond markets and stoked global recession fears. Days later, he announced a pause in those measures until Jul 9 to allow for countries to cut deals with the White House, sparking relief rallies that have pushed some markets towards all-time highs. However, he once again shook confidence by saying on Wednesday that he intended to send letters telling governments what levies Washington would be imposing. "We're going to be sending letters out in about a week and a half, two weeks, to countries, telling them what the deal is," he told reporters. "At a certain point, we're just going to send letters out. And I think you understand that, saying this is the deal, you can take it or leave it."

Most G7 members ready to lower Russian oil price cap without US
Most G7 members ready to lower Russian oil price cap without US

Straits Times

time2 hours ago

  • Straits Times

Most G7 members ready to lower Russian oil price cap without US

FILE PHOTO: Russian flag with stock graph and an oil pump jack miniature model are seen in this illustration taken October 9, 2023. REUTERS/Dado Ruvic/Illustration/File photo BRUSSELS/PARIS - Most countries in the Group of Seven nations are prepared to go it alone and lower the G7 price cap on Russian oil even if U.S. President Donald Trump decides to opt out, four sources familiar with the matter said. G7 country leaders are due to meet on June 15-17 in Canada where they will discuss the price cap first agreed in late 2022. The cap was designed to allow Russian oil to be sold to third countries using Western insurance services provided the price was no more than $60 a barrel. The European Union and Britain have been pushing to lower the price for weeks after a fall in global oil prices made the current $60 cap nearly irrelevant. The sources, who declined to be named, said the EU and Britain are ready to lead the charge and go it alone, backed by the other European G7 countries and Canada. They said it is still unclear what the U.S. will decide, though the Europeans are pushing for a united decision at the meeting. Japan's position also remains uncertain, they said. "There is a push among European countries to reduce the oil price cap to $45 from $60. There are positive signals from Canada, Britain and possibly the Japanese. We will use the G7 to try to get the U.S. on board," one of the sources said. The White House had no immediate comment. During the G7 finance ministers meeting in the Canadian Rockies last month, U.S. Treasury Secretary Scott Bessent remained unconvinced there was a need to lower the cap, according to sources. However some U.S. Senators may endorse the idea, including Lindsay Graham, who in recent weeks told reporters he supports lowering the cap. Graham is pushing a hard-hitting new set of Russia sanctions that could impose steep tariffs on buyers of Russian oil. The Canadian foreign ministry was not immediately available for comment. The EU has proposed lowering the price to $45 a barrel in its latest 18th package of sanctions. The package must have unanimity from member states in order for it to be adopted, which could take several weeks. Russia's largest export grade, Urals, trades at around a $10 a barrel discount to the Dated Brent benchmark out of Baltic ports. Brent futures have been trading below $70 a barrel since early April. Sources said Washington's buy-in was not essential to lower the cap owing to Britain's dominance in global shipping insurance, and the EU's influence on the Western rules-abiding tanker fleet. The U.S., however, does matter when it comes to dollar-denominated payments for oil and its banking system. The EU and its Western allies have been progressively cracking down on Russia's shadow fleet of tankers and related actors, which work to circumvent the cap. The pressure has started to hurt Moscow's revenues and Western allies hope this will push more of the oil trade back under the cap. Russia's state-owned oil producer Rosneft reported a 14.4% slump in profits last year. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.

China stocks soar on AI, trade hopes. Which are the country's ‘Terrific 10' firms?
China stocks soar on AI, trade hopes. Which are the country's ‘Terrific 10' firms?

Business Times

time2 hours ago

  • Business Times

China stocks soar on AI, trade hopes. Which are the country's ‘Terrific 10' firms?

[SINGAPORE] Chinese stocks have see-sawed since late last year, as investors reacted to factors ranging from government stimulus, artificial intelligence (AI) and US President Donald Trump's trade tariffs. The Asian giant's companies had experienced a lengthy bear market in the past few years, with investors flocking to US markets. Last October, Hong Kong's Hang Seng Index also plummeted sharply after investors' hopes of a long-awaited rebound were left unfulfilled following a disappointing stimulus announcement from Beijing. The script has flipped in the second quarter of 2025. While the US faces renewed trade uncertainty and market volatility over tariffs, Chinese equities are staging a resurgence, led by what some analysts are now calling the 'Terrific 10': tech and consumer giants listed mostly in Hong Kong that are witnessing a revival in investor sentiment. This group includes companies such as Alibaba, Tencent and BYD. The US and China reaching a consensus on a trade framework on Jun 10 also gave a boost to Chinese stocks, although some gains were pared after Trump said that he would unveil unilateral tariff rates within two weeks. The S&P 500, much of it driven by the 'Magnificent Seven' technology giants, has risen just over 2 per cent in the year to date as at Jun 12. On the other hand, Hong Kong's Hang Seng Tech Index, which tracks the 30 largest technology companies listed in Hong Kong (including seven of the Terrific 10), has surged around 22.4 per cent in the same period. In the last couple of months, global banks HSBC, Morgan Stanley, Citibank and Goldman Sachs have all upgraded Chinese equities to overweight, many citing the attractive valuations among technology stocks and strategic government support for the tech sector. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Much of the rally's momentum has also been carried by AI-led optimism, reminiscent of the AI boom in the US in 2024 that led to the strong performance of the Magnificent Seven stocks. To some, China's technological potential is no longer perceived as based on merely capitalising on 'one to n' capabilities – that is, reproducing existing innovations at scale. Instead the country has showcased its capabilities to create 'zero to one' innovation from the ground up. 'DeepSeek's advancements underscore the immense potential of China's AI ecosystem,' said Terence Lim, equities portfolio manager at Eastspring Investments Singapore, in a report. 'Many companies are not only innovating rapidly, but also trading at much more attractive valuations compared to their US counterparts.' Morgan Stanley upgraded its outlook on China to overweight, based on how the earnings of MSCI China companies beat estimates after four straight years of quarterly misses. While the fallout from Trump's latest tariffs is likely to quell global growth significantly, strong corporate earnings may mean that the Terrific 10 remain resilient in the coming months. We bucket the 10 into three categories – Internet giants, e-commerce and consumer goods, and electric vehicles (EVs) – and discuss upcoming trends to watch. Internet giants: Tencent, NetEase, Baidu, SMIC China's Internet tech companies have moved quickly to capitalise on the 'DeepSeek effect'. Tencent, for instance, has incorporated DeepSeek's R1 model into its 'AI Search' functions within its Weixin app, as well as rolled out an upgraded iteration of its proprietary Hunyuan-T1 model. The digital ecosystem giant, which operates WeChat and its mainland equivalent Weixin, has seen its share price surge 22.6 per cent since the beginning of the year. Also in this bucket is China's largest semiconductor foundry Semiconductor Manufacturing International Corp (SMIC), which has surged more than 40 per cent in the year to date as at Jun 12, driven by the AI hype and a government push for self-sufficiency in chip production. However, potential chip tariffs from the US may slow its runaway share price. Others include gaming operator NetEase, and search engine provider Baidu, both of which have yet to truly achieve lasting growth through AI adoption. While each has expanded into adjacent areas – music streaming in NetEase's case, and autonomous driving for Baidu – neither has managed to step out of the shadow of dominant rivals such as Tencent and Alibaba. Yet, relatively cheap earnings multiples compared with China's other tech giants may support the positive outlook for them. E-commerce and consumer goods: Alibaba, JD, Meituan, Xiaomi Standing tallest among the AI-driven resurgence of Chinese stocks is Alibaba, the e-commerce giant founded by Jack Ma. In addition to its main e-commerce platforms Taobao and Tmall, Alibaba has also emerged as a leader in the cloud computing space. Its Nasdaq-listed shares have soared on the company's commitments to boost AI spending and the unveiling of its open-source AI model Qwen 2.5 in early March. Analysts also see the company as having quietly buried the hatchet with Beijing after regulatory crackdowns since 2020, aligning with broader state efforts to stimulate domestic consumption. Meituan, however, has analysts feeling mixed. The food delivery giant has seen strong fundamental growth in the past year, with total revenue growing 22 per cent to 338 billion yuan (S$60.3 billion). Yet, as at Jun 12, the stock has lost around 6.4 per cent in the year to date, underperforming the 22.4 per cent rise in the Hang Seng Tech Index over the same period. Still, planned expansions of its overseas meal delivery service Keeta in the Middle East and Hong Kong, as well as plans to integrate AI into its work processes, could see the Hong Kong-listed stock rebound. Xiaomi, meanwhile, has drawn attention with a 90 per cent earnings growth in the fourth quarter of 2024, its fastest since 2021. The smartphone maker has been actively repositioning itself as a broader Internet of Things ecosystem player, with growing bets on smart devices and AI integration. But it is the company's aggressive push into EVs that has sparked the most interest. Electric vehicles: BYD, Geely, Xiaomi China's EV crown remains with BYD, the Warren Buffett-backed automaker that is quickly emerging as a global competitor to market leader Tesla. The company sold more than four million new energy vehicles in 2024, overtaking Tesla in global EV sales revenue. BYD has ramped up AI-assisted driving features and continues to expand overseas into Europe, South-east Asia and South America. Trailing BYD's market dominance is a crowded pool of automakers competing for second place, including Geely and the aforementioned Xiaomi. Geely sold a respectable 2.18 million vehicles in 2024, pushing sales revenue up 34 per cent from the previous year and beating profit estimates. Meanwhile, Xiaomi's US$5.5 billion fundraising in March for EV investments has cemented its commitment to take on BYD and Tesla in the EV game. The company plans to open its second EV factory in Beijing in mid-2025, raising its sales target to 350,000 vehicles in 2025. Caution beneath the hype However, continued strong performance of Chinese tech stocks is not a given. While the Terrific 10 may reflect genuine innovation and recovery – especially in AI, EVs, and digital platforms – confidence in a sustained turnaround hinges on policy clarity and macro stability. Morgan Stanley chief China economist Robin Xing said that recent memories of regulatory crackdowns, structural deleveraging and deflationary pressures have left a deep imprint on investors, while the recent tariffs may cause further downside for Chinese equities. However, the prospect of lower tariffs following trade negotiations may prompt Beijing to take a more gradual path to fiscal stimulus, he wrote.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store