September 27, 2022
SINGAPORE – The ripple effects of the British pound’s plunge could lead to some opportunities for businesses in Singapore and Singaporeans, but some businesses are feeling the heat.
On Monday, the sterling dropped as much as 4.9 per cent to an all-time low of US$1.0327 before stabilising at around US$1.05405.
In Singapore, money changers that The Straits Times spoke to reported that the currency’s record dive has seen the Singdollar valued at about $1.54 against one pound at 7pm on Monday, compared with $1.63 at the end of August.
“The current rate and drop is very volatile, but I don’t think it’s here to stay. I’ll give it two to three days for it to bounce back to its usual rate,” said Mr Mohamed Rafeeq, owner of Clifford Gems and Money Exchange in Raffles City Shopping Centre.
“It’s the best time for people to go on holiday to the UK because this is the cheapest rate ever – I’ve never seen the rate drop so low before,” he added.
An employee at a money changer in Raffles Place, who wanted to be known only as Mr Din, said only a few more people had inquired about the pound on Monday.
“The difference in the rate is huge, and I hope it’s temporary because it’s causing a loss for many money changers,” he said.
Those likely to benefit from the drop would be Singaporeans looking to invest in the property sector in Britain or to travel there, said Ms Selena Ling, chief economist and head of treasury research and strategy at OCBC Bank.
Travel agency EU Holidays has seen a sharp rise of about 30 per cent in inquiries about holidays to Britain since Sept 10, said Ms Mandy Chen, its marketing manager.
“Singaporeans will also enjoy cheaper goods imported from the UK or see it as an opportunity to send their children there to study,” said Ms Ling.
“Singapore businesses may also look for bargains including real estate, but those dependent on exports to the UK may suffer from a combination of potential UK recession or growth slowdown and a more expensive Singdollar as compared to British pound sterling.”
Ms Ling also said that the weaker pound is likely to add to imported inflation and to the many challenges facing the British economy, amid high energy prices.
Singaporeans with investments, such as property, in Britain will probably worry about the value of their assets in Singdollar terms, said Mr Philip Wee, senior foreign exchange strategist at DBS Bank.
“UK is not a top major trading partner of Singapore. China’s struggling economy and the large and rapid rate hikes in the Western economies are more worrisome for the global outlook,” he said.