More pain ahead for struggling Singapore dollar, analysts warn

It will lose more ground against the greenback.

The Singapore dollar will experience greater weakness against the US Dollar in coming months, in light of lacklustre economic growth and muted inflation.

According to UOB, while the MAS is expected to maintain the current monetary policy in its October policy meeting, the SGD is likely to test the lower boundary of the S$ nominal effective exchange rate (NEER) before ending the year between 1.42-1.43 against the USD.

“With the expectations of SGD weakness, the short-end interest rates like SOR (swap offer rate) will likely move up further as investors demand higher interest rates to compensate for a weakening SGD,” said UOB.

On Tuesday, the SGD crashed to a fresh six-year low against the greenback, with the USD/SGD finally breaking above the $1.43 handle.