The Monetary Authority of Singapore (MAS) announced in October 2019 that they will reduce the rate of appreciation of the Singdollar. The last time such move was implemented was in 2016. This comes after reports of a economic slowdown in the country’s economy. This announcement should not come as a surprise after much news on the impact of the US-China trade war.
Impact of weaker Singdollar
With a weaker Singdollar against major currencies, import will be more expensive however export will be more affordable. Singapore has narrowly escaped a technical recession in the 3rd quarter of 2019. There are many statistical indicators that businesses here are floundering with a weaker appetite of goods and services.
SIBOR to go down
In the past, we note that a weaker Singdollar may have a correlation to our benchmark interest rate, SIBOR. However after multiple rounds of currency depreciations by major countries, low interest rates set by central banks globally among other factors, the correlation seemed to be weaker than before. FindAHomeLoan thinks SIBOR would be lower in the next 6-month period to around 1.65% to 1.80%. This should lead to lower mortgage rates, be it fixed or variable, and bodes well for borrowers but not savers.