How the Singapore dollar could perform against the US dollar this year
[SINGAPORE] Fading US exceptionalism could pave the way for further appreciation of the Singapore dollar against the greenback, said analysts.
The Singdollar surged to around 1.29 per US dollar on Monday (May 5) – a level not seen since September 2024. That drove its year-to-date gain to about 5 per cent, with its five-day gain at around 1 per cent.
Among other Asian currencies, the Taiwan dollar surged to highs not seen in over 30 years, while the Malaysian ringgit and safe-haven Japanese yen also strengthened. On Friday morning during Asia trade, the US dollar/Singapore dollar was last at 1.30.
Asian currencies jumped as the US dollar weakened on worries that the tariff war could hurt the US economy. However, Donald Trump has suggested the US may strike trade deals with some countries as soon as this week.
Amid the uncertainty, in the short term till the end of 2025, analysts expect the Singdollar to further appreciate against the greenback and hover within the 1.26 to 1.29 range. The broader trajectory points to continued strength against the US dollar.
As global investors pull back from the US dollar, the Singdollar is emerging as a resilient alternative, said Saktiandi Supaat, Maybank head of FX research.
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'The Singapore dollar can continue to appreciate against the US dollar as US exceptionalism fades and a broad diversification on a flight to quality away from the US dollar continues,' he said.
He added that the Monetary Authority of Singapore's policy stance is also responsible for the steady appreciation of the Singapore dollar.
Saktiandi said that the city-state's stability and strong fundamentals – including a strong reserves position and credible central bank policy – make its currency a more attractive option when markets look for alternatives to the greenback.
The strengthening of the Singdollar has been supported by improved regional sentiment, which ANZ Research attributes to easing tariff concerns amid trade talks between US and its trading partners.
'More fundamentally, we continue to question US dollar's status as a primary reserve currency and a safe haven… (as) the rise in US protectionist measures have significantly heightened economic policy uncertainty,' says Christopher Wong, OCBC FX strategist.
The analyst, however, posited that the overshoot in the Singdollar for the last few days is 'due for correction' now that market activity has started picking up.
He said the US Federal Reserve keeping rates steady on Wednesday supports the US dollar, and a near term rebound for the Singdollar back to 1.31 per US dollar 'should not be ruled out'.
'As a result, traders may start closing out their previous bets against the US dollar. Unless there is a new reason for the US dollar to weaken further, we can expect the USD/SGD exchange rate to stabilise and possibly drift slightly higher,' Wong added.
Tariff impact
Philip Wee, DBS' senior FX strategist noted that countries should focus on ensuring continued access to the US market rather than currency competitiveness.
'Singapore's primary concern about US tariffs lies more in their secondary impact – how global trade disruptions and weakening external demand could weigh on its export-driven economy,' Wee said.
He added that Trump's approach to fixing global imbalances – using tariffs as leverage in trade negotiations – undermines the trade recycling system that has historically financed US deficits in the US dollar-centric global economy and financial system established after World War II. The shift, he suggested, is starting to have far-reaching implications.
Wee cited the Taiwan dollar's sharp gains on May 2 and May 5 as a sign of growing caution among Asian exporters and institutional investors, who are concerned about potential losses on their US dollar-denominated earnings and assets amid fears of a broader confidence crisis in the US dollar.
Beyond tariffs, Wee highlighted uncertainty around the Trump administration's proposed tax reforms and financial sector deregulation, both of which could introduce further volatility to the global financial system.
While global financial systems face potential disruption, Singapore appears to be holding steady.
'Singapore dollar rates have been falling with Singapore Government Securities, one of the best performing sovereign debt in the world,' Saktiandi added. 'In uncertain times like these, we would suggest that is a testament to Singapore's strengths.'
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