USD/SGD slides as Singapore ruling party wins landmark general election
- The USD/SGD pair declined by about 0.20% as traders reacted to the Singapore election held on Friday.
- While the ruling party won most of the seats, it lost ground to the opposition.
- The Singapore Bureau of Statistics will release the Q2 GDP data tomorrow and trade numbers on Friday.
The USD/SGD pair declined slightly as traders reflected on the recent election in Singapore. The pair is trading at 1.3882, which is lower than last week’s high of 1.3991. It is also the lowest level since June 18.
USD/GGD reacts to Singapore election
Singapore became the latest country to go through a national election during the pandemic. According to the electoral commission, the ruling People’s Action Party (PAP) won the election but lost ground to opposition parties. The party secured 83 of the 93 seats in parliament. The Workers Party won 10 seats, the most ever held by the opposition. Also, its popular vote declined to 61% from 71% in the previous election.
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Analysts believe that a more diverse parliament could lead to better reforms in the government. The prime minister, Lee Hsien Loong, also admitted this saying:
“We have a clear mandate but the percentage of the popular vote is not as high as I had hoped for. The results reflect the pain and uncertainty that Singaporeans feel in this (Covid-19) crisis.”
Lee, son of the country’s founding president, has been the prime minister since 2004. His earmarked successor, Heng Swee won his seat by a slim 53% lead.
Singapore battling coronavirus pandemic
The election happened at a time when Singapore is battling the coronavirus pandemic. The country has confirmed more than 45,900 cases and 26 deaths. Most of those infected have recovered. Also, according to Worldometer, the number of daily new infections has dropped to less than 200.
In response, the government has launched a significant stimulus package worth more than $70 billion. These funds went to wages subsidy to companies, rent waivers for small businesses, and providing more support to businesses. As a result, the budget deficit rose to about $52.3 billion or about 15.4% of GDP.
As a result, the Strait Times Index has gained by 19% from its lowest point in March. The USD/SGD pair has dropped by more than 5% during this period.
The Singapore dollar has benefited from an increase of exports, emerging services and retail salesand the problems going on in Hong Kong. On the latter point, Singapore is viewed as a better alternative to Hong Kong because of the recently passed national security law.
Tomorrow, we will receive the first reading of Singapore GDP data. Analysts see the economy dropping by 10.5% on a QoQ basis and by 37.4% on a YoY basis. That will be the worst performance of the country’s economy. Finally, on Friday, we will get the country’s trade numbers.
USD/SGD technical analysis
The USD/SGD pair is trading at 1.3885. On the daily chart, the price is below the 50-day and 100-day exponential moving averages. It is also slightly below the 61.8% Fibonacci retracement level. It is also slightly below the important resistance level of 1.3973 that is shown in red. Therefore, the pair is likely to continue falling as bears attempt to test the next support at 1.3800