Singapore Dollar Poised for Further Gains with Potential US Dollar Parity

The Singapore dollar (SGD) has appreciated by approximately 5.8% this year, reaching a 10-year peak near 1.28 against the US dollar (USD). Analysts attribute this surge to a weakened USD amid easing tariff tensions and optimism for US-China trade negotiations. This trend has also bolstered other Asian currencies, such as the Taiwan dollar. The Monetary Authority of Singapore’s (MAS) steady policy and the nation’s robust economic fundamentals further support the SGD’s rise, positioning it as a regional safe-haven currency.

Experts highlight a global shift away from USD dominance, with the SGD emerging as a beneficiary. Maybank’s FX research head notes that Singapore’s stability makes its currency appealing for investors seeking alternatives to the USD. Forecasts suggest the SGD could hit 1.2800 in Q3 and 1.2650 in Q4, driven by expectations of manageable tariff impacts and continued USD softening as the US Federal Reserve eases rates. However, recent rapid gains may temper, with markets likely to stabilize after the sharp USD sell-off.

Long-term, analysts see the SGD potentially reaching parity with the USD. Singapore’s status as a global financial hub, coupled with large current account surpluses, supports this trajectory. A Bank of Singapore economist suggests parity could occur gradually without a USD crisis, though MAS interventions may temper excessive SGD strength. While trade wars and USD reserve status pose risks, the SGD’s upward trend remains strong, fueled by capital inflows and investor confidence in Singapore’s economic resilience.