China’s reopening should be a boon to SGD and regional currencies, say analysts

THE Singapore dollar (SGD), which has climbed 4 per cent against the Chinese yuan (CNY) over the past 2 months to trade at levels last seen a year ago, could continue to strengthen — albeit at a slower pace — and China’s reopening should be a boon to the SGD and regional currencies, say analysts.

One Singapore dollar (SGD) was worth 4.87 yuan (CNY) on Thursday (May 19), compared to 4.67 yuan in mid-March. Going by the global macro projections of Trading Economics and analysts’ expectations, the Singapore dollar is forecast to trade around 4.88 by the end of this quarter and by year’s end.

Peter Chia, senior FX strategist at UOB, said the abrupt weakness of the CNY is a reflection of the increased downside risks to the Chinese economy due to the country’s strict zero-Covid strategy. China’s policy, entailing the stamping out of new cases through widespread testing and strong lockdown measures, has brought tough curbs down on its largest cities from Shanghai to Beijing.