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How will the weaker Singapore dollar affect local stocks?
The bourse will be less attractive to foreign investors.
A weaker Singapore dollar may be a much-needed boon to exporters, but the weak currency could spell trouble for the stock market.
According to Macquarie Research, the FSSTI has relatively few beneficiaries from a weak SGD. A weaker SGD also makes FSSTI’s high dividend stream less attractive to foreign investors.
“And we note the S$ can weaken versus the US$ while strengthening versus other currencies in the NEER benchmark. That phenomenon was seen in mid 2012, and acted as a headwind for the stock market in our view. Shifting to a more neutral policy would exacerbate this impact,” noted Macquarie research.
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