- Singapore dollar fell against the USD as the number of COVID-19 cases continued to rise.
- Singapore government is set to unveil the third stimulus package this year to cushion businesses and household
- Singapore economy, which was ailing before COVID-19, is expected to slide into recession this year.
Singapore dollar dropped against the US dollar as the market reacted to the surging number of Coronavirus cases and the central bank intervention. The exchange rate between the Singapore dollar and the USD has risen to 1.4400, which is a few pips below its five-year high.
Singapore Coronavirus cases rise
Singapore has recently seen the number of COVID-19 cases rise. Yesterday, the country reported 120 new cases, which was its biggest daily increase. The number brought the total number of the infected to more than 1,300. 320 of these people have recovered while 6 people have died.
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According to Gan Kim Yong, most of the new cases were found in cluster of foreigners, who were placed in quarantine as the number of cases rose.
These numbers came a few days after the country announced far-reaching measures to contain the virus. These measures included closing most schools and workplaces for a month.
Singapore dollar and economy takes a hit
Singapore’s economy was in trouble before the current Coronavirus pandemic. In 2019, the country narrowly avoided sliding into a technical recession in the third quarter. In the quarter, the economy grew by 0.1% on a year-on-year basis. This is after it grew by the slowest rate in a decade in the second quarter.
The economic challenges continued in the fourth quarter when the economy recorded a 0.8% growth rate. This brought the country’s annual growth rate at just 0.7%, which was lower than the 15% growth rate in 2010.
Recent data have not been promising either. Just last week, data from Markit showed that the country’s manufacturing PMI declined by 3.3 points to 45.4 in March. This was the second contraction in a row and the worst number since February 2009 at the height of the financial recession.
The decline of activity was broad based, with the electronics PMI falling 3.5 points to 44.1, a ten-year low. The services sector has also been hit as many tourists stay at home and many restaurants and hotels remain shut. As a result, the country reported a 8.6% decline in retail sales in March.
Also, other data showed that the economy declined by an annualized rate of more than 10.6% in the first quarter. The unemployment rate in Singapore has also been rising. The rate jumped to 2.3% in 2019 from 2.8% in 2018.
Singapore economy takes a hit
Singapore government response to Coronavirus
Singapore government has stepped in to prevent job losses and safeguard the economy. In February, the government unveiled a $4.4 billion stimulus package to cushion businesses that have been affected by the disease. The funds were to help enterprises to manage their wage bill and avoid bankruptcies.
Shortly afterwards, the government unveiled another stimulus worth more than $33.4 billion. The funds were drawn from the country’s reserves.
Today, according to Bloomberg, the government will unveil another stimulus package that will provide support to families and companies.
Meanwhile, Singapore’s central bank has also acted in a bid to ensure financial stability. Last month, the bank announced that it would provide up to $50 billion to companies. The bank will achieve this through a currency swap with the Federal Reserve. Additionally, the bank yesterday announced that it would bring forward the date it discloses its forex interventions this month instead of July as scheduled. The goal of this action is to bring stability to the financial market.