SINGAPORE - The Singapore dollar is on track to fall further to 1.40 per US dollar as the economy slows, said Philip Wee, DBS Bank FX strategist.
The SGD was quoted at 1.3772 against the USD at 14.27pm, according to Bloomberg.
DBS has forecast the USD/SGD to hit 1.40 by 3Q19, said Mr Wee on Tuesday.
The Ministry of Trade and Industry downgraded Singapore's 2019 growth on Tuesday morning; it narrowed its forecast range downwards to 1.5 to 2.5 per cent, from an earlier 1.5 to 3.5 per cent. This comes as the economy saw growth of 1.2 per cent in the first quarter of 2019 - the lowest growth rate in almost 10 years.
Mr Wee's conviction of a bigger fall in the local unit has been tested the past five months as he had forecast the Singdollar depreciating against the USD to 1.40 this year since January. But the SGD "has only fallen 1.1 per cent year to date versus USD, as of this morning," he said.
We have held this (1.40 target) since the start of the year; it "wasn't easy especially after the Fed paused with a dovish tilt," said Mr Wee. In December 2018 the US Federal Reserve had signalled two interest rate hikes for 2019 but by March it said there would be no hikes this year.
But United Overseas Bank market strategist Quek Ser Leang thinks SGD weakness is almost done.
"We expect the USD/SGD to move above 1.38 within the next four weeks. Heading into H2 2019, USD/SGD is expected to head towards the 2018 peak of 1.3875," said Mr Quek.