Weaker US dollar will hurt some companies but may give cheer to market

Published Wed, Jun 24, 2020 · 09:50 PM

Singapore

THE US dollar is expected to weaken moderately as economies exit from lockdowns and more money flows into riskier assets. This will be bad news for Singapore-listed companies with significant exposure to the United States, but should be broadly positive for the local equity market.

The start of the year saw tightness in USD funding as investors held onto the world's reserve currency amid escalating virus fears. But the USD shortage was staunched when the US Federal Reserve expanded existing swap lines with central banks to ensure sufficient liquidity in the global financial system.

With the unprecedented scale of interest rate cuts and fiscal stimulus, Bank of Singapore (BoS)'s currency strategist Sim Moh Siong is forecasting a "moderate weakening" of 3 to 5 per cent of the greenback. "(But)…