[SINGAPORE] The US dollar fell to its weakest point against the Singapore dollar since November 2024, as markets continued to be volatile following continued global trade uncertainty.
The greenback has fallen around 1.4 per cent against the Singapore dollar since the start of the week, weakening on Friday (Apr 11) morning by 0.3 per cent. The US-Singdollar pair last traded at S$1.3210 at 4 pm.
On a year-to-date basis, the US dollar has lost around 2.8 per cent against the Singdollar.
The US dollar index on Friday posted its worst day since 2022, Bloomberg data indicated, as investors fled US Treasuries, with 10-year yields jumping to 4.456 per cent on Friday morning during Asia hours. Bond prices move opposite yield.
Since Apr 2, when US President Donald Trump announced reciprocal tariffs, the index has weakened around 3.5 per cent. It fell to 99.74 by Friday afternoon.
In a note on Thursday, UOB said: “The sharp and swift decline appears excessive, but with no signs of stabilisation yet.” Its three-month view is that there is room for the US dollar-Singdollar pair to pull back further – but with strong support levels at S$1.32 and S$1.30.
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“Markets are factoring in the risk of a slowing American economy and higher inflation,” said Kiran Kowshik, global forex strategist at Lombard Odier.
He noted that markets have treated the tariffs as more damaging to the American economy than the rest of the world. The yen jumped about 1 per cent against the greenback, while the euro rose 0.9 per cent to fetch US$1.1306.
The decline in the US dollar comes amid wild swings in stocks. On Wednesday, Trump announced a 90-day delay to all reciprocal tariffs beyond 10 per cent, but increased tariffs on China to 125 per cent. Markets rebounded strongly after, with the S&P 500 soaring 9.5 per cent.
On Thursday, the US confirmed that Trump’s tariff hikes brought the additional rate on many Chinese products to 145 per cent. The S&P 500 closed 3.5 per cent down on the day.
Policy slope easing
However, expected moves by the Monetary Authority of Singapore (MAS) to ease the policy slope of the Singapore dollar nominal effective exchange rate policy band may skew the greenback-Singdollar pair to the upside for most of 2025, said Christopher Wong and Frances Cheung of OCBC’s foreign exchange and rates strategy team.
“This forecast takes into consideration the implication of Trump tariffs on global growth, trade and sentiments,” they said in a note on Apr 10.
Factors such as the recent sell-off in Singapore stocks, an escalation in US-China trade tensions and a higher greenback against the renminbi could contribute to weakening of the Singapore dollar against the US dollar, said Wong and Cheung.
Possible tariffs against pharmaceuticals and semiconductors could further weaken the Singapore dollar, which depends highly on trade in these sectors, they added.
“That said, the prospects of a firmer recovery in the euro and the renminbi may turn out to be surprise factors that would support the Singapore dollar.”
