THE US dollar strengthened against the Singapore dollar on Monday (Feb 3) morning, building on gains over the weekend as US President Donald Trump announced tariffs on goods from China, Canada and Mexico.
The greenback rose as much as 0.9 per cent against the Singapore dollar, fetching S$1.3681 past 8.20 am on Monday.
Since Saturday, the dollar has leaped 0.97 per cent against the Singapore currency, from the currency pair trading at around S$1.353 on Saturday. Since early last week, the dollar has strengthened 1.8 per cent.
The dollar index gained against most global currencies on Monday morning, as it strengthened around 1.2 per cent to 109.65.
It gained against many major currencies, sending the Canadian dollar to its weakest since 2003, the euro to its lowest since November 2022 and the Mexican peso to a near three-year low, according to Bloomberg data.
Trump announced tariffs on goods from China, Canada and Mexico on Saturday US time (Sunday Singapore time), although news had already leaked earlier in the week with Reuters citing sources that the announcement would take place on that day.
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The escalation in trade tensions is sparking expectations of higher inflation and higher for longer US rates. Demand for currencies from other countries would weaken as their imports get more expensive.
The Monetary Authority of Singapore (MAS) also eased its monetary policy for the first time since 2020 on Jan 24 this year on expectations of slower growth than initially forecast.
The MAS said it will “slightly” reduce the slope of the Singapore dollar nominal effective exchange rate (S$NEER) policy band, with no change to the width of the band or the level at which it is centred.
The central bank manages policy by using the exchange rate – as opposed to interest rates.
Against the Singapore dollar, the US dollar weakened from levels around S$1.35 before the announcement, to around S$1.34 in the days following. The greenback, however, strengthened again from Jan 28.
