Over the past few months, the SGD-RMB exchange rate has been on a rollercoaster ride.

In January, the Singapore dollar exchange rate rose to 5.42, and then fell all the way, falling directly to 5.29 on February 3, hitting a record low!

As of 7 February, the SGD-CNY exchange rate slowly recovered to 5.41.

 

 

 

Source: Sina Finance

 

 

 

Why did the new coin plummet?

 

 

1. Monetary Policy Adjustment by the Monetary Authority of Singapore

 

 

The Monetary Authority of Singapore (MAS) announced monetary policy adjustments in early 2025, the first major adjustment in two years.
 

At the heart of this policy is to slow the rate of appreciation of the Singapore currency, aiming to deal with inflationary pressures at home and abroad.
 

As an economy highly dependent on international trade, Singapore's monetary policy often needs to balance the impact of domestic economic growth with the impact of the external economic environment.
 

The monetary easing of the HKMA's monetary policy means that the upward pressure on the Singapore dollar has eased, which has led to a decline in the exchange rate.

 

 

2. Inflationary pressures and economic slowdown

 

 

According to the HKMA's projections, Singapore's headline inflation rate is expected to be between 1.5% and 2.5% in 2025, while core inflation is expected to be between 1% and 2%.
 

Despite the relatively modest inflation rate, the increased uncertainty in the global economy, especially the slowdown in economic growth in major trading partners, has necessitated monetary policy to maintain economic stability.
 

Slowing down the pace of appreciation of the Singapore dollar has helped to alleviate imported inflationary pressures, but it has also had a direct impact on the exchange rate.

 

 

3. The impact of the global economic environment

 

 

The uncertainty of the global economic environment is also one of the important reasons for the decline in the exchange rate of the Singapore currency against the renminbi.

At the beginning of 2025, global trade tensions intensified, especially the tariffs implemented by the Trump administration in the United States, which had a shock to global markets.

As a highly open economy, Singapore's currency exchange rate is vulnerable to external economic fluctuations.

 

In the coming months, the Singapore currency is likely to remain volatile against the renminbi.

 

But experts predict that in the long run, the new currency will remain the most stable currency in Southeast Asia.

 

 

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