The impressive scale of global currency markets underscores the dynamic nature of foreign exchange (FX), where trillions of dollars’ worth of currencies are traded daily. By April 2022, the turnover in global FX markets had reached a record US$7.5 trillion per day. These markets are subject to fluctuations driven by various factors, including interest rates, inflation, economic growth, and capital inflows.
The Singapore Dollar (SGD), known for its stability and safety, has gained prominence due to Singapore’s status as a major financial centre and a primary hub for foreign investment in Southeast Asia. This stability is crucial in times of global economic turbulence, providing a reliable haven for investors.
Among the currencies most actively traded on these vast markets are the US Dollar (USD), Euro (EUR), Japanese Yen (JPY), and British Pound (GBP). Each plays a significant role in global trade and finance, reflecting their economies’ size and the depth of their financial markets.
Given its proximity and economic ties, the Malaysian Ringgit (MYR) is also of considerable importance to Singapore. It is a vital currency for many Singaporean investors and businesses engaged in cross-border transactions with Malaysia.
In 2024, amidst ongoing global uncertainties, the performance of the SGD against these major currencies provides insights into not only regional economic health but also broader geopolitical and economic dynamics. Thus, understanding the SGD’s movements against these currencies can offer valuable perspectives on local and international economic landscapes.
SGD VS USD
The SGD has depreciated by 2.9% against the USD. This decline is primarily due to the US Federal Reserve adjusting its interest rate expectations based on robust US economic data, strengthening the USD against most currencies. Increased geopolitical tensions, particularly in the Middle East, have also seen investors gravitate towards the USD as a safe haven, exacerbating the SGD’s decline against it.
SGD VS EUR
The SGD’s movement against the Euro has been minimal, showing a slight decline of 0.5%. This relative stability is due to the similar economic outlooks and monetary policies of Singapore and the Eurozone. Both regions are experiencing moderated growth and inflation, leading to closely aligned monetary stances, resulting in minor fluctuations between the two currencies.
SGD VS JPY
The SGD has appreciated significantly by 6.3% against the Japanese yen. This rise is attributed to Japan’s ongoing loose monetary policy and an inflation rate exceeding the Bank of Japan’s target. Despite a recent rate hike, weaker inflation data suggest limited further tightening, contributing to the SGD’s strength against the JPY.
SGD VS GBP
The SGD has remained almost static against the GBP, with a minor depreciation of 0.1%. The UK’s economic conditions, including a recent move into recession and a significant reduction in inflation, mirror those of Singapore to some extent, leading to minimal changes in the currency exchange rate.
SGD VS MYR
The SGD has also strengthened against the MYR by 1.0%. This appreciation is driven by a weak economic outlook in Malaysia, exacerbated by its significant economic ties to China and political uncertainties. The USD’s strength, influenced by the US Federal Reserve’s hawkish stance, has additionally strained emerging market currencies, including the MYR.
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While the SGD has weakened against the strong USD, its performance against other major currencies has been decent. It has appreciated significantly against the JPY and remained stable against the EUR and GBP.
This reflects Singapore’s strong economic fundamentals, including continued foreign capital inflows and moderate inflation, positioning it well to manage global economic uncertainties. The SGD continues to attract global and regional investors, maintaining its appeal as a reliable and stable currency in Southeast Asia.
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