Latest news with #Singdollar
Straits Times
2 days ago
- Business
- Straits Times
Singapore dollar faces pressure from US tariffs, policy shift
The Singapore dollar is under renewed pressure from US tariffs and as speculation of exchange-rate policy easing rises. SINGAPORE – The Singapore dollar is under renewed pressure as US trade challenges are primed to worsen and as speculation of exchange-rate policy easing rises. The Singdollar, which is already weakening as the US dollar recovers, faces fresh tariff threats after US President Donald Trump recently warned he may impose levies on pharmaceuticals and semiconductors, two of Singapore's key exports. Economists at firms such as Barclays and Asia Decoded expect the Monetary Authority of Singapore (MAS) to move to a more accommodative policy setting in July to support the economy. 'The tariff uncertainty, with higher tariffs on pharmaceuticals likely Aug 1, could add to growth headwinds for Singapore in the second half,' said Moh Siong Sim, a currency strategist at Bank of Singapore. The local dollar may weaken toward $1.30 to the greenback in the near term, especially if rising levies stoke US inflation and delay Federal Reserve interest rate cuts, he said. The Singdollar was at 1.2846 to the US dollar at 8.10am local time on July 21. Those concerns are echoed by Priyanka Kishore, principal economist at Asia Decoded. 'Singapore is not only at a disadvantage from the prospect of sectoral tariffs on pharmaceuticals and semiconductors, but may also see an increase in the base rate of 10 per cent on Aug 1,' she said. Some strategists believe MAS will ease policy when it meets later in July, given inflation appears subdued. Economists predict data due on July 23 will show core inflation rose by just 0.7 per cent in June. Top stories Swipe. Select. Stay informed. Singapore Priority for singles, higher quota for second-timer families to kick in from HDB's July BTO exercise Singapore Witness stand not arena for humiliation in sex offence cases, judge reminds lawyers Asia PM Ishiba under siege after trouncing in Upper House polls as 'Japanese First' Sanseito gains Business Bigger, quieter, greener: High-volume low-speed fans see rising demand in warming Singapore Singapore New home owners in Singapore find kampung spirit on BTO Telegram groups Singapore What would it take for S'pore to shed the dirty image of its blue recycling bins? Business DBS hits record high above $47; CDL up after director Philip Yeo announces resignation MAS will flatten the slope of its Singapore dollar nominal effective exchange rate, or S$Neer, policy band by 50 basis points to zero in July, rather than waiting, Barclays Bank economists wrote in a note last week. Unlike many of its global peers, Singapore's central bank manages inflation by adjusting the S$Neer policy band rather than altering interest rates. With the S$Neer trading near the top end of the band, any flattening of the slope will cap the currency's relative strength to its major trading partners. 'With the MAS likely to stay on an easing path and flatten the slope of the S$Neer this month, our bias is for further Singapore dollar weakness,' Asia Decoded's Ms Kishore said. While Singapore's central bank looks likely to ease policy, bets on Fed rate hikes have been pushed back as policymakers watch for tariff-related inflation, bolstering the US currency. The Singapore dollar's use as a funding vehicle for carry trades may also weigh on its outlook. Carry trades are a type of foreign exchange trade in which you borrow money in one currency at low interest and invest in another currency that provides a higher rate of return. Bloomberg Intelligence said in July that three of the four emerging-market exchange factor models it uses in its analysis have gone long the Indonesian rupiah versus short the Singapore dollar. BLOOMBERG
Straits Times
2 days ago
- Business
- Straits Times
Singapore dollar faces downward pressure from US tariffs, policy shift
The Singapore dollar is under renewed pressure from US tariffs and as speculation of exchange-rate policy easing rises. SINGAPORE – The Singapore dollar is under renewed pressure as US trade challenges are primed to worsen and as speculation of exchange-rate policy easing rises. The Singdollar, which is already weakening as the US dollar recovers, faces fresh tariff threats after US President Donald Trump recently warned he may impose levies on pharmaceuticals and semiconductors, two of Singapore's key exports. Economists at firms such as Barclays and Asia Decoded expect the Monetary Authority of Singapore (MAS) to move to a more accommodative policy setting in July to support the economy. 'The tariff uncertainty, with higher tariffs on pharmaceuticals likely Aug 1, could add to growth headwinds for Singapore in the second half,' said Moh Siong Sim, a currency strategist at Bank of Singapore. The local dollar may weaken toward $1.30 to the greenback in the near term, especially if rising levies stoke US inflation and delay Federal Reserve interest rate cuts, he said. The Singdollar was at 1.2846 to the US dollar at 8.10am local time on July 21. Those concerns are echoed by Priyanka Kishore, principal economist at Asia Decoded. 'Singapore is not only at a disadvantage from the prospect of sectoral tariffs on pharmaceuticals and semiconductors, but may also see an increase in the base rate of 10 per cent on Aug 1,' she said. Some strategists believe MAS will ease policy when it meets later in July, given inflation appears subdued. Economists predict data due on July 23 will show core inflation rose by just 0.7 per cent in June. Top stories Swipe. Select. Stay informed. Singapore Priority for singles, higher quota for second-timer families to kick in from HDB's July BTO exercise Singapore Witness stand not arena for humiliation in sex offence cases, judge reminds lawyers Asia PM Ishiba under siege after trouncing in Upper House polls as 'Japanese First' Sanseito gains Business Bigger, quieter, greener: High-volume low-speed fans see rising demand in warming Singapore Singapore New home owners in Singapore find kampung spirit on BTO Telegram groups Singapore What would it take for S'pore to shed the dirty image of its blue recycling bins? Business DBS hits record high above $47; CDL up after director Philip Yeo announces resignation MAS will flatten the slope of its Singapore dollar nominal effective exchange rate, or S$Neer, policy band by 50 basis points to zero in July, rather than waiting, Barclays Bank economists wrote in a note last week. Unlike many of its global peers, Singapore's central bank manages inflation by adjusting the S$Neer policy band rather than altering interest rates. With the S$Neer trading near the top end of the band, any flattening of the slope will cap the currency's relative strength to its major trading partners. 'With the MAS likely to stay on an easing path and flatten the slope of the S$Neer this month, our bias is for further Singapore dollar weakness,' Asia Decoded's Ms Kishore said. While Singapore's central bank looks likely to ease policy, bets on Fed rate hikes have been pushed back as policymakers watch for tariff-related inflation, bolstering the US currency. The Singapore dollar's use as a funding vehicle for carry trades may also weigh on its outlook. Carry trades are a type of foreign exchange trade in which you borrow money in one currency at low interest and invest in another currency that provides a higher rate of return. Bloomberg Intelligence said in July that three of the four emerging-market exchange factor models it uses in its analysis have gone long the Indonesian rupiah versus short the Singapore dollar. BLOOMBERG
Straits Times
5 days ago
- Business
- Straits Times
Look for income-paying assets amid uncertainties: CIMB Bank
Find out what's new on ST website and app. CIMB expects fixed income will outperform, at least in the second half of the year, while it is staying neutral on equities. SINGAPORE – Investors can navigate volatile markets by focusing on investments that generate income, such as fixed income securities and shares, noted CIMB Bank on June 18. Mr Jason Kuan, Singapore director of investment research and advisory at its Chief Investment Office, told a briefing that the US tariff announcements in April prompted customers to ask the bank if they should adjust their portfolios or even sell up. 'We've always advocated that you should build a globally diversified portfolio,' noted Mr Kuan. 'But probably more importantly, it is to stay invested. And the best way is to weather the volatility because these things come time and time again.' He also backed investments that pay dividends: 'This income can really help to cushion volatility in the portfolio. When things start to finally settle, you can shift your assets over to more growth-oriented and more exciting stuff.' Mr Kuan said CIMB expects that fixed income will outperform, at least in the second half of the year, while it is staying neutral on equities. He also referred to Singapore as 'a harbour in choppy waters', one that offers neutrality and a relatively stable currency, so investors could consider Singapore dollar assets as part of their diversified portfolios. Top stories Swipe. Select. Stay informed. Singapore 30% of aviation jobs could be redesigned due to AI, automation; $200m fund to support workers: CAAS Singapore HSA looking to get anti-vape cyber surveillance tool with AI capabilities Singapore Alleged Kpod peddler filmed trying to flee raid in Bishan charged with 6 offences Singapore NTU upholds zero grade for student who used AI in essay; panel found 14 false citations or data Singapore Character counts as much as grades: Desmond Lee tells students after a class on race and culture Singapore Residents in South West District get help to improve employability, find career opportunities Life Kinokuniya opens third bookstore at Raffles City, weeks ahead of schedule Business DBS shares rally to a new record as STI clocks yet another high 'This can be in the form of shares listed on the Singapore Exchange, Singdollar-denominated bonds or hedged share classes for mutual funds.' Mr Kuan added that the Singdollar has been appreciating against the weakening US dollar and expects this to continue. The Singdollar is up more than 6 per cent against the greenback in 2025. He is also hopeful of an upswing in the fortunes of the Singapore stock market, in the light of the Monetary Authority of Singapore announcing measures in February to revive the bourse. Mr Jason Kuan, CIMB Singapore's director of investment research and advisory at its Chief Investment Office, told a briefing that the US tariff announcements in April prompted customers to ask the bank if they should adjust their portfolios. PHOTO: CIMB Mr Kuan noted that the stock market is largely capitalised by the three local banks – DBS, OCBC and UOB – and other blue-chip stocks. 'They are trying to find ways to re-energise the Singapore equity market and really to get more companies to list here. So we look forward to that.' National projects could also boost the economy amid a weaker global economic outlook and the impact of US tariffs, he said. The Singapore Government in April lowered its forecast for 2025 growth to 0 per cent to 2 per cent, from a range of 1 per cent to 3 per cent previously. The construction of Changi Airport's Terminal 5 and the expansion of Marina Bay Sands continue to provide support for the Singapore economy and jobs market, he added.
Business Times
15-07-2025
- Business
- Business Times
MAS flags subdued H2 outlook amid tariff risks, warns of softer demand ahead
[SINGAPORE] The Monetary Authority of Singapore (MAS) is taking a 'cautious' view of the outlook for the second half of 2025, amid 'considerable uncertainty' and a 'wider than usual' range of potential outcomes. 'We take a cautious view of the outlook, and our base case is that global economic activity will slow in H2 2025, with inflation dampened for the year,' said Chia Der Jiun, managing director of MAS. Speaking at a media conference on Tuesday (Jul 15) for the release of the central bank's latest annual report, Chia said its mandate to secure medium-term price stability would serve as an 'anchor of stability' for the Singapore economy during this time of 'uncertainty and fundamental change'. At present, the impact of US tariffs has 'yet to assert in a major way', he noted. 'Tariff deadlines have been rolled back, while businesses have front-loaded orders ahead of threatened tariff increases. 'For now, economic activity and output have been resilient, but front-loading will not continue indefinitely and will have to be paid back.' 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 Chia added that consumption and investment will likely soften in the coming months, in line with forward-looking consumer and business confidence surveys, which are slipping. Flash estimates released by the Ministry of Trade and Industry on Monday showed Singapore's economy grew 4.3 per cent year on year in the second quarter of 2025, exceeding consensus expectations. Chia attributed part of this to the trade-related sector, which benefited from deferred tariff implementation and front-loading of exports. However, he expects US tariffs to weigh on production and exports with a lag in H2, especially as the front-loading boost fades. 'Overall, Singapore's gross domestic product growth is expected to be subdued over the rest of the year,' he said. Inflation is expected to remain subdued as well, with global demand weakness and the diversion of excess global goods production exerting downward pressure on imported prices. Chia said domestic cost pressures will likely ease as economic activity slows and some slack emerges in the economy, though inflation could be firmed slightly by the lagged pass-through of earlier administrative cost increases. He deferred a question on MAS' upcoming monetary policy stance to the next policy statement, which is due by the end of July. Stronger Singdollar On the Singapore dollar's recent strength, Chia said the appreciation of the Singapore Dollar Nominal Effective Exchange Rate (S$NEER) was 'broad-based' and occurred in the context of US dollar weakness. Year to date, the Singapore dollar has appreciated 6.2 per cent against the greenback. Under the Republic's monetary policy framework, the S$NEER is allowed to fluctuate within an undisclosed policy band, with adjustments made to the band's slope, level or width as needed to maintain price stability. 'We've been able to manage it within the policy band, and we should continue to be able to do so,' said Chia. On the domestic financial system, MAS' stress tests show that Singapore's banks have strong capital buffers and healthy liquidity profiles, even under a 'more severe' scenario applied by the central bank this year. They 'should weather a global recession and tightened financial conditions, for an extended period', Chia said. Corporates and households also remain 'generally resilient', with healthy debt servicing capacities and financial buffers. Even so, smaller firms in export-facing sectors may face revenue and liquidity risks as orders decline, and 'should take steps early' to build liquidity buffers and diversify revenue, including by tapping the Business Adaptation Grant. 'Similarly, households with less stable incomes should plan their finances prudently and avoid taking on large new loan commitments during this period of uncertainty,' he said.
Straits Times
15-07-2025
- Business
- Straits Times
Weakening US dollar gives a boost to S'pore market as investors review their portfolios
The US dollar hit a low of S$1.271 on June 30 and has recovered slightly since then to around the S$1.28 level. SINGAPORE – Singapore retail investors holding US equities have had to contend with a weakening US dollar in 2025, which is eating away at their investment gains when converted back to Singapore dollars. The greenback fell after US President Donald Trump first announced his 'Liberation Day' tariffs on April 2. It hit a low against the Singdollar of $1.271 on June 30, recovering slightly since then to around the $1.28 level.
