Shoppers rein in spending on US goods as Singdollar weakens

Amazon boxes are seen stacked for delivery in the Manhattan, New York City, on Jan 29, 2016.
Amazon boxes are seen stacked for delivery in the Manhattan, New York City, on Jan 29, 2016. PHOTO: REUTERS

Shopping online for goods in the United States has suddenly become pricier for consumers here after regulators moved to curb the appreciation of the Singdollar.

The surprise decision by the Monetary Authority of Singapore on Thursday has already sent the greenback higher, making those products on Amazon.com look a little less of a bargain.

The Singdollar fell by as much as 1.2 per cent against the US dollar yesterday before strengthening to about $1.358.

It was the biggest one-day decline since Nov 6 last year. Analysts expect further declines.

That spells bad news for retailers in the US servicing online consumers here, but better news for local shops.

Public relations consultant Claire Yong, 30, usually shopped for household and baby products on Amazon, but will buy locally now.

"I used to buy on US-based websites like Amazon because similar items cost less online than in local stores. But if the currency weakens, I will just buy them locally, and enjoy the added bonus of not needing to wait for the items to arrive."

  • S$ likely to do better than regional currencies

  • Economists expect the Singapore dollar to weaken against the currencies of most major trading partners, but say it will likely do better than its regional counterparts.

    Mr Emmanuel Ng, currency economist at OCBC, said that without a policy of gradual appreciation of the Singdollar, it is susceptible to more weakening, especially with the US dollar likely to strengthen.

    The silver lining is Singaporeans can enjoy cheaper travel to neighbouring countries like Thailand, as the S$ is likely to weaken less against the US$, compared with its Asian peers.

    Credit Suisse senior foreign exchange strategist Heng Koon How said Asian currencies would continue weakening against the greenback because of contracting exports.

    "The Singapore dollar, however, may weaken to a lesser extent...because the Singdollar has strong fundamentals like the AAA rating."

    But Mr Andy Ji, Asian currency strategist at Commonwealth Bank of Australia, cautioned that inflows into the Thai and Malaysian bond markets could still strengthen their currencies as long as the US Federal Reserve stays dovish on interest rates, lifting risk appetites.

    He added that he expected the Australian dollar to strengthen against the Singdollar, buttressed by stronger commodity prices.

    Lee Xin En

Mr Marcus Liang, a 25-year-old operations analyst, said he would rethink big-ticket items. "As holidays cost a fair bit more than daily spending, I will probably avoid going to the US for the time being," he added.

Mr Lawrence Linker, chief executive officer of MBA consultancy MBA Link, said the strengthening US dollar over the past year was prompting more applicants to consider European business schools.

"Cost-conscious applicants have always been interested in MBAs from European schools, which are typically shorter and cheaper. With the US dollar strengthening, it's almost like the European MBAs are on sale," he noted.

" But for some, the top US schools will be desirable at any price point."

The weakening Singapore dollar has triggered fears that imported goods will be pricier, but Mr Brian Tan, economist for South-east Asia at Nomura, said prices of goods may not necessarily go up.

"A weaker SGD does make imports more expensive but the question is whether companies will pass on the extra cost to consumers. Commodity prices are a bigger factor and with low oil prices, overall imported inflation will remain quite weak," Mr Tan added.

Mr Rahul Mudliar, the director of his own financial services company, said he would reconsider spending on imported goods.

"If my iPhone costs $50 more, I might keep away from buying it for now. The move is too small for me to change my spending habits now, but I might buy less US-made goods, perhaps a Samsung instead of an iPhone."

A version of this article appeared in the print edition of The Straits Times on April 16, 2016, with the headline 'Shoppers rein in spending on US goods as Singdollar weakens'. Print Edition | Subscribe