[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$1.3279.
On a year-to-date basis, the dollar has lost around 2.8 per cent against the Singdollar.
The dollar index had its worst day since 2022 on Friday, based on Bloomberg data, 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 US dollar index has weakened around 3.5 per cent. It was last at 100.15 on Friday.
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 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 dollar, 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 90-day delays 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.
The greenback-Singdollar exchange rate has wide impact on Singapore as the two countries have a close and substantial trade relationship, underpinned by the US-Singapore Free Trade Agreement that came into force on Jan 1, 2004.
The US Trade Representative office indicated that the US enjoyed a US$38 billion goods and services trade surplus with Singapore in 2022 on a total trade value of US$122 billion. Exports were US$80.5 billion; imports were US$42.2 billion.
US foreign direct investment in Singapore (stock) stood at US$309.4 billion in 2022 – an 8.7 per cent increase from 2021. US direct investment in Singapore is led by non-bank holding companies, manufacturing and wholesale trade.
