Singapore’s non-oil exports fell by 4.6% compared to last year, which is worse than the expected drop of 1.8%. This follows a previous rise of 13.0%. The unexpected decline in exports shows a decrease in demand for Singapore’s products. Since this drop was not predicted by analysts, it could influence economic plans.

Impact on the Trade-Dependent Economy

The significant decline in non-oil exports to -4.6% sends a worrying message about Singapore’s trade-based economy. This number is far off the expected -1.8%, indicating a quick drop in external demand. We should prepare for a weaker Singapore Dollar (SGD) against the US dollar in the upcoming weeks. This expected weakness is backed by broader global trends from mid-2025. Recent data reveals that China’s manufacturing PMI for July 2025 fell to 49.7, indicating a contraction and hurting demand in a major export market. Additionally, global semiconductor sales, which are crucial for Singapore’s exports, dropped by 6.2% year-over-year in the second quarter of 2025. Given this information, we see the potential for a decline in the local stock market. The Straits Times Index (STI) is closely tied to global growth, so investing in put options on STI-tracking ETFs may be a smart way to guard against or bet on further declines. Many large companies in the index are likely to have their earnings forecasts lowered due to this news.

Potential Policy Changes

The Monetary Authority of Singapore (MAS), which primarily uses currency exchange rates as its policy tool, will monitor this situation closely. The recent poor export results increase the likelihood that the MAS will take a more neutral or dovish approach at its upcoming policy meeting in October 2025. This reinforces our belief that the SGD will likely trend lower. Looking back at the slowdown in 2019, we see that similar weak export figures led to several months of underperformance and volatility for the SGD. This historical pattern suggests the current trend may continue. Therefore, we expect rising implied volatility, offering opportunities for traders using option strategies like straddles, especially if they foresee larger price movements. Create your live VT Markets account and start trading now.

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