The meme coin reckoning has come

Memeinated animation

Next 100x presale starting soon


USD/SGD tumbles as Singapore downgrades 2020 growth forecast

on May 26, 2020
  • The USD/SGD pair declined after mixed data from Singapore.
  • The government downgraded the economic forecast for the year as the country sunk into a recession in the first
  • Industrial production grew at a slower pace in April after the record 21% increase in March.

Follow Invezz on Telegram, Twitter, and Google News for instant updates >

The USD/SGD pair declined today as the market reacted to the improving GDP data from Singapore. The market also reacted to the weak inflation and industrial production data from the country.

Singapore dollar
USD/SGD falls

Singapore sinks into a recession

Copy link to section

Data from Statistics Singapore showed that the country sunk into a recession in the first quarter because of the coronavirus pandemic.

The economy contracted by 4.7 per cent in the quarter after expanding by about 0.6 per cent in the fourth quarter. The data wasbetterthan the previously released estimate of 10.6 per cent. The GDP contracted by 0.7 per cent on year on year basis, which was better than the first estimate of 2.2 per cent.

The decline was mostly because of a 4.0% contraction in the construction sector and a 21.8 per cent decline in the services sector. The wholesale and retail sector also weakened by 5.8 per cent, continuing a 1.9 per cent decline in the previous quarter. Meanwhile, the accommodation and food services, and transportation and storage sectors fell by 23.8% and 8.1% respectively.

This decline was partially offset by a sharp increase in non-oil exports (NODX) in April. Data from the bureau showed that exports increased by 17.6 per cent in March from the previous year. That increase was mostly due to a 20.5 per cent increase in non-electronic items like non-monetary gold and machinery.

Indeed, according to the office, the manufacturing sector expanded by 6.6 per cent after contracting by 2.3 per cent in the fourth quarter.

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

This surge in exports continued in April as NODX surged by 9.7 per cent. That increase was boosted by pharmaceutical products. In a statement, the department said:

“In view of the deterioration in the external demand outlook for Singapore, as well as the expected economic impact of CB measures, the GDP forecast for Singapore has been downgraded to ‘7.0% to 4.0%’, from -4.0% to -1.0%.”

USD/SGD reacts to weak inflation data

Copy link to section

The USD/SGD pair also reacted to weak April consumer price index and industrial production data. According to the Singapore Department of Statistics (SDS), the country’s headline consumer price index (CPI) declined by 0.7 per cent in April. This was worse than the previous increase of 0.3 per cent and worse than the consensus estimates of -0.4 per cent. Analysts polled by Bloomberg were expecting the CPI to be at -0.3 per cent.

The market also reacted to the weak industrial production data from the country. The production rose by 3.6 per cent from March and by 13.6 per cent from a year earlier. The decline in April was the worst it has been since the 22.3 per cent decline in February this year.

While the numbers released today were bad, there are signs that the Singapore economy has bottomed because the country has started to reopen. Just yesterday, the government said that it was beginning the second phase of reopening. This reopening will allow businesses in manufacturing and engineering to resume work.

The government expects the economy to shrink by between 1 and 4 per cent.

Singapore dollar weak against the greenback

Copy link to section

The Singapore dollar has been relatively weak against the greenback this year. It has dropped by about 5 per cent, partly because the Monetary Authority of Singapore (MAS) allowed it to drop. Although the authority does not set rates, it manages how the SGD trades against other key currencies.

Still, analysts believe that rates will turn negative for the first time since 2011. They attribute this to the MAS decision to provide sufficient liquidity in the financial market. In a statement to Bloomberg, analysts at DBS bank said:

“If Singapore dollar liquidity becomes too flush, relative to the U.S. dollar, the financial sector may be willing to swap Singapore dollars for U.S. dollars at very low Singapore dollar interest rates.”

USD/SGD technical outlook

Copy link to section
USD/SGD technical forecast

The USD/SGD pair is trading at 1.4215, which is lower than yesterday’s high of 1.4268. On the daily chart, the price is slightly above the 38.2% Fibonacci retracement level. The price is slightly above the 50-day and 100-day exponential moving average. Therefore, I expect it to continue falling as bears attempt to move below the 1.4200 support level.


Looking to capitalise on rising & falling USD, GBP, EUR rates? Trade forex in minutes with our top-rated broker, eToro.


77% of retail CFD accounts lose money.