USD/SGD slides as Singapore exports rise for the second straight month

The USD/SGD pair dropped as the market reacted to the positive trade numbers from Singapore. The Singapore dollar also rose against other currencies like the Hong Kong dollar and the Malaysian ringgit.

Singapore non-oil exports jump

Singapore non-oil domestic exports rose by 9.7 per cent in April this year, according to the statistics office. This was the second straight of gains in a period when the world is going through a recession due to the coronavirus pandemic. Still, the jump was lower than the 17.6 per cent increase experienced in March. Also, the exports declined by 5.8 per cent month-on-month on a seasonally adjusted basis.

In total, the country’s non-oil exports were S$14.9 billion, down from the previous S$15.8 billion.

According to the office, the jump in exports was mostly due to an increase in demand from the United States, the European Union, and Japan. Exports to the three jumped by 124 per cent, 106 per cent, and 81.1 per cent. At the same time, exports to its top markets like China, Hong Kong, and Malaysia declined.

The office attributed the strong performance to a jump in non-monetary gold, food preparations, and disk media products. Other categories that did well were pharmaceuticals, which rose by more than 460 per cent and miscellaneous manufactured articles. Exports to the emerging markets fell.

Singapore has been diversifying its economy away from oil. In April, its crude oil exports declined by 64.9 per cent due to lower demand and lower oil prices. This decline was mostly due to a sharp demand from Malaysia, Indonesia, and Panama.

The non-oil re-exports (NORI) declined by 8.3 per cent in April due to a 6 per cent decline in electronic shipments. In March, electronics had increased by 8.6 per cent. This decline was attributed to Malaysia, the US, and South Korea.

Singapore’s non-oil retained imports (NORI rose to S$8.7 billion in April from the previous S$7.1 billion.

Singapore opening up

Singapore has reported more than 28,000 cases and just 22 coronavirus-related deaths. In the past few days, the government has embarked on a reopening process because the number of new infections has fallen.

Last week, the USD/SGD reacted to news that the government had allowed some companies to open-up. The minister of health said:

“With the decrease in community transmission, [Singapore] will progressively ease the tighter circuit breaker measures over the coming weeks.”

Analysts hope that the recent streak of weak data will start to fall. Just last week, data from the statistics office showed that total retail sales declined by 13.3 per cent year on year in March and 1.3 per cent on a MoM basis. The sales fell by 9.7 per cent excluding motor vehicles. This decline was partly due to a 23.7 per cent decline in food and beverage and a 38.6 per cent decline in department store sales.

Another data showed that the outlook for the service sector is gloom in the next six months. The general business outlook for the next six months declined to minus 58, the lowest level ever. The worst decline was in the accommodation, food and beverages, and retail trade.

In addition, data shows that the country is in a deeper-than-expected recession. According to the central bank, the country will drop by between -4 per cent and -1 per cent this year. This will be the worst contraction on record.

USD/SGD technical outlook

The USD/SGD dropped today after the better-than-expected exports data from Singapore. On the daily chart, the pair is slightly above the 38.2 per cent Fibonacci retracement level. It is also slightly above the 100-day and 50-day exponential moving averages. Also, the pair formed a Doji pattern on April 30. This implies that the USD/SGD pair may attempt to retest the previous high of 1.4650 again.