LOGIC.co.id – The Singapore dollar (SGD) has been showing significant strengthening throughout 2025, sparking speculation that the currency could reach parity with the United States dollar (US$) in the not-so-distant future. Analysts believe the scenario of 1 SGD equaling 1 US$ is no longer just wishful thinking but a realistic possibility within a foreseeable time frame.
Currently, the Singapore dollar is trading around US$1.29, nearing its highest level in a decade after hitting US$1.28 last year. According to Christopher Wong, a foreign exchange strategist at OCBC Bank, the SGD has appreciated by approximately 5.8% so far this year.
"This strengthening is driven by the weakening of the US dollar and easing tariff tensions between the United States and China," Wong told Channel News Asia.
Wong added that expectations of renewed trade dialogues and agreements between the two economic giants are bolstering the sentiment of a “de-escalation” in the trade war, which has long weighed down the US dollar.
Global Diversification Benefits the SGD
Saktiandi Supaat, Head of FX Research at Maybank and a member of Singapore’s parliament, also noted that the weakness in the US dollar is due to pressure from tariff policies and a slowdown in domestic US economic growth.
“We are witnessing a diversification away from the US dollar into other currencies, with the SGD emerging as one of the key beneficiaries,” Saktiandi explained.
He also emphasized the role of the Monetary Authority of Singapore (MAS) in maintaining the stability and strength of the SGD through careful and targeted monetary policies.
According to Saktiandi, Singapore’s strong economic fundamentals make the SGD an attractive choice for global investors, particularly amid global economic uncertainty. He even described the SGD as a regional “safe haven” during turbulent global markets.
SGD-USD Parity Becoming Increasingly Plausible
Maybank projects the Singapore dollar to reach US$1.265 by the end of this year. Meanwhile, Wong from OCBC remains optimistic that the SGD will continue its upward momentum—especially if the US Federal Reserve opts to cut interest rates in the near term.
Several fundamental factors are supporting the Singapore dollar’s strength, including:
1. Consistent Current Account Surplus
Singapore recorded a current account surplus of US$128 billion in 2024, equivalent to 17.5% of its Gross Domestic Product (GDP). This reflects the country's strong external position and role as a net global creditor.
2. Stable International Capital Inflows into the Financial Sector
As a global financial hub, Singapore continues to attract substantial capital inflows, further strengthening its currency.
Mansoor Mohi-uddin, Chief Economist at Bank of Singapore, stated that parity between the SGD and the US dollar could very well happen in our lifetime. He compared the situation to the Swiss franc, which achieved parity with the US dollar following the 2008 financial crisis.
"Both Singapore and Switzerland are small, open economies with large financial sectors that attract significant capital flows. This supports the long-term appreciation of their currencies," Mansoor told Bloomberg.
He added that while parity often occurs during global crises, it could still materialize gradually as long as Singapore maintains a strong current account surplus and healthy capital inflows.
Challenges Facing the US Dollar on the Global Stage
Christopher Wong also noted that the rise of US protectionist policies adds to economic uncertainty and challenges the US dollar's dominance as the world’s primary reserve currency.
“In the short term, the US dollar is unlikely to be fully replaced. However, global investors are increasingly reallocating funds away from US dollar-denominated assets, which could further weigh on its value,” said Wong.
Nevertheless, he reminded that the US dollar's dominance remains strong. More than 50% of global foreign exchange reserves are still held in US dollars, and the US Treasury market remains the most liquid in the world, making it a core asset for international trade.
Conclusion
Although parity has not yet occurred, the strengthening trend of the Singapore dollar presents a tangible possibility that the currency could one day match the US dollar. Backed by strong economic fundamentals, targeted monetary policies, and its appeal as a global financial hub, the Singapore dollar has the potential to become one of the world’s leading currencies in the future.