USD/SGD steady for now, ‘upsides’ expected in the long run

IG analyst Jingyi Pan says the USD/SGD could rally in the long run, with the SGD expected to decline.

The USD/SGD looks to be heading for a period of calm, after what has mostly been a turbulent last six months.

This is according to IG Asia Market Strategist Jingyi Pan, who envisions the currency pair trading laterally over the next few months.

She adds that there has been an ‘improved risk sentiment’ in the market, thanks to the trade progress between US and China in recent weeks, as well as healthy US economic data that was revealed on Friday, 20 December.

All these developments mean that the ‘USD strength is expected to be capped for a while’, Pan concluded.

Already the minor has picked up in the last two weeks, hovering sideways around the S$1.355 mark, following a dip that took place immediately after a phase one trade deal was reached between both countries.

USD/SGD could hit S$1.37 in 12 months

However, Pan noted that in the longer run, some ‘upsides’ could be present, as the Singdollar is expected to decline in strength, with the SGD Nominal Effective Exchange Rate having been ‘elevated for quite some time now’.

Julian Wee, Credit Suisse investment strategist, Asia Pacific, said he continues to see the USD/SGD at 1.3650 and 1.3700 in three and 12 months respectively, ‘in large part on account of the USD/CNY moving lower in the near term before rising again later in 2020’.

The USD/SGD is currently trading at S$1.3560 as of 10.20am on Tuesday, 24 December.

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