Dan AtkinsonSingapore’s currency is one of the youngest in the world, launched only in 1967, yet it displays a stability that many older denominations would envy.
Indeed, to study its recent movements – or lack of them – is almost to be transported back into a pre-1973 world of fixed exchange rates and rock-steady currency values.
The Singapore dollar is currently trading against the US dollar at $0.74, identical to its value a month ago, on 12 February.
Pound weakness boosts S$ value
Twelve months earlier, on 12 February 2018, it traded at $0.76. You need to go back five years to find a significant change – the currency stood at $0.79 on 21 February 2019.
It is a similar story against the euro, where the current rate of €0.65 compares to €0.64 on 12 January this year and €0.61 on 12 February 2018.
Five years ago, on 21 February 2014, the S$ stood at €0.57.
Against sterling, not only the currency of the former colonial master Britain but a denomination to which it was linked prior to the breakdown in fixed-exchange rates in the early Seventies, there has been a little more movement, but this is almost certainly a result of Brexit-induced pound weakness rather than volatility on the part of the Singapore dollar.
To an extent, the Singapore dollar’s stability is no accident. The Monetary Authority of Singapore oversees its movements against the currencies of key competitor and trading partners and intervenes to steer its course when this is thought necessary.
This is in contrast to the US central bank, the Federal Reserve, the Bank of England and, so far, the European Central Bank, which do not attempt to hold their respective currencies within specific trading bands.
Budget will help smaller firms exploit technology
In its latest Article IV health check, in July, the International Monetary Fund (IMF) praised the country’s economic performance.
“Singapore’s economy is on a strong cyclical upswing,” said the IMF. “Economic growth has recovered to a three-year high, led by externally-oriented sectors that benefitted from the synchronized global expansion. Economic momentum is becoming more broad-based, helping to reduce the labour market slack. Growth is expected at or above the potential rate in the near term, increasingly supported by domestic demand.”
It added: “Inflation is subdued but expected to rise modestly. The current account surplus, as a share of GDP [gross domestic product], has remained large. Risks to the near-term outlook are broadly balanced and come mainly from external sources.”
Singapore’s 2019 budget is due on 18 February, and Trade and Industry Minister Koh Poh Koon has said it will include measures to help small and medium-sized enterprises (SMEs) to exploit technological developments. According to The Straits Times: “Dr Koh said the new initiatives will be aimed at helping SMEs digitise and further their research and development, as well as train their workforce to make use of these new technologies.”
