Singapore Dollar General Info
According to the Bank for International Settlements, trading in the Singapore dollar contributes to 1.8% of the foreign exchange market’s daily turnover, and as such the currency is Asia’s third most traded (behind the Japanese yen and China’s yuan) and the twelfth most traded in the world.
Singapore’s currency is of special importance to the country’s central bank, the Monetary Authority of Singapore (MAS). Unlike other central banks which tighten or ease monetary policy by adjusting a national interest rate, the MAS achieve the same end via management of Singapore dollar exchange rates – an unconventional method which has served the country well since its introduction in 1981.
Because of its importance to monetary policy, the value of the Singapore dollar is managed carefully under a ‘managed float’ regime and is not truly freely floating. Its value is managed against a basket of currencies from the country’s major trading partners and the trade-weighted Singapore dollar exchange rate is restricted by the central bank to moves within a specified range, the boundaries of which are announced every six months.
The currency’s all-time valuation low against the US dollar occurred in September 1985 when USD/SGD reached 2.31. Its all-time high came in August 2011 when USD/SGD fell to just 1.2.
SGD - Market View
In August, Singapore GDP data for the second quarter exceeded investor expectations and the Singapore dollar rose.
Singapore’s Ministry of Trade and Industry said in August that GDP grew a whopping 2.2% in the second quarter, far above the Reuters median estimate of 0.5% and a vast improvement on the first quarter, during which Singapore’s economy shrank by 2.1%. Singapore’s economy has spent 2016 and 2017 swinging between quarterly periods of expansion and contraction. Annualized GDP growth in Singapore is now 2.9%.
By mid-August, against a crumbling US dollar, SGD remained high, buying $0.733, and was up nearly 6% against the greenback since lows posted on January 3rd.
Against the Japanese yen, SGD was buying ¥79.91. At the time of this report, SGD/JPY was little changed on the year.
Against the resurgent Australian dollar and Canadian dollar, SGD fell sharply in July but was recovering in August. SGD/AUD and SGD/CAD stood at A$0.933 and C$0.934 respectively.
SGD continued to struggle in early August against the euro, against which it stood close to long-term lows (€0.6237).
Forecasts: Upbeat forecasts for the Singapore dollar are hard to come by. Singapore’s largest bank, DBS, advised investors in July to “remain guarded against expecting more appreciation,” and the team at TradingEconomics.com are predicting a fall in the SGD/USD exchange rate to $0.6944 over a twelve-month time horizon.
SGD/USD - 20:01 SGT
1 Day 1 Week: Singapore Dollar starts the week even against the United States Dollar with the SGD/USD at 0.7336 and up for the last 7 days with a rise of 0.1%.
3 Month Trend: SGD/USD is trading higher in the 3-month range [Hi:0.7373, Lo:0.7183] and for the quarter is up 1.85%.