How the Singapore dollar could perform against the US dollar this year

[SINGAPORE] The Singapore dollar and other Asian currencies are continuing to gain ground against the US dollar as the tariff fallout weighs on the greenback.

The Singdollar opened the week firm at 1.29 to the US dollar – a level not seen since September 2024. Year-to-date, that’s a jump of about 5 per cent. On Friday (May 9) morning in Asia trade, the pair was trading at 1.30.

With the ongoing uncertainty and market volatility, analysts see the Singapore unit appreciating further against the greenback to trade in the 1.26 to 1.29 range for the rest of 2025.

Christopher Wong, OCBC FX strategist, said: “Fundamentally, we continue to question the 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.”

For now, OCBC believes the Singdollar is “due for correction” after its strong run in the last few days. He said the US Federal Reserve’s decision to hold rate cuts on Wednesday supports the US dollar, and does not rule out the Singapore unit retreating back to 1.31 in the near term.

“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 said.

Beyond the immediate term, Maybank sees the Singapore dollar rising gradually from 1.2950 to 1.28 by the end of Q3 and 1.265 by end Q4.

DBS sees the local unit at 1.30 for Q3 2025 and 1.29 for Q4, before rebounding to 1.27 by the end of 2026.

ANZ Research has a more pessimistic outlook, expecting the Singapore dollar to weaken from 1.29 to a range of 1.32 and 1.33 for 2025 and the first two quarters of 2026. It sees the Monetary Authority of Singapore’s (MAS’) more modest policy adjustment and broader global factors working in favour of the US dollar.

Factors at play

Saktiandi Supaat, Maybank head of FX research, said that as global investors pull back from the US dollar, the Singdollar is emerging as an resilient alternative.

“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. American exceptionalism is the belief that the US is unique in many ways, underpinned by the nation’s world leadership in capital markets, trade, globalisation, entrepreneurship, technology, military supremacy – and the US dollar as a reserve currency.

Saktiandi’s comments point to how Trump’s chaos in the last few months has undermined the premium investors place on US assets.

On the other side of a depreciating US currency, Saktiandi said the Singapore dollar’s steady appreciation is also supported by MAS’ policy stance. That, along with the city-state’s stability, strong fundamentals and reserves, make its currency a more attractive alternative than the greenback.

Besides Singapore, other Asian currencies are also benefiting from the US dollar’s weakness. The Taiwan dollar has surged to highs not seen in over 30 years, while the Malaysian ringgit and safe-haven Japanese yen have also strengthened.

Impact on economies

For open economies like Singapore, a strong currency will mitigate imported inflation as they pay less for imports priced in US dollars, such as oil. Countries with US dollar-denominated debt will benefit too.

Saktiandi noted that while a strengthening Singapore dollar made exports more expensive and thus dent demand, it also attracts capital inflows as it reduces forex exposure.

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.