Singapore dollar set to be Asia’s top-performing currency for third year

The Singapore dollar (SGD) is poised to be Asia’s top-performing currency for the third consecutive year, thanks to the Monetary Authority of Singapore’s (MAS) commitment to a robust exchange rate policy to combat inflation. The SGD is currently the third-best performing currency in Asia, but thanks to MAS’s strong moves, it is rapidly closing the gap with the leaders, the Hong Kong dollar and the Indian rupee.

MAS has been actively using the exchange rate as its main monetary policy tool to strengthen the SGD against the currencies of Singapore’s major trading partners to contain inflation. This strategy has already resulted in a significant decline in core inflation to 3% in June, with further declines expected to be around 2% by 2025. This approach ensures cost stability for goods and helps create a supportive economic environment for businesses and consumers alike.

Singapore’s economic indicators also highlight the strength of the SGD. The 2.9% GDP growth in Q2 2024 exceeded expectations, and MAS forecasts further economic development at the upper end of the 1% to 3% range this year. This comes amid geopolitical tensions and rising global interest rates. This growth, coupled with MAS’s policies, makes the SGD attractive to investors and confirms the country’s strong economic fundamentals.

In contrast, other leading Asian currencies face significant challenges. The Hong Kong dollar, pegged to the US dollar, is vulnerable to potential rate cuts by the US Federal Reserve, which could trigger a sharp reversal. Similarly, the Indian rupee is showing signs of weakness, hovering near a record low against the greenback.

Overall, the SGD continues to hold its ground due to its strong economy and effective policies. This makes Singapore an attractive destination for foreign entrepreneurs looking to grow their businesses in a stable and promising environment.