Trading Singapore Dollar
Represented by the symbol S$ and with a Forex code of SGD, the Singapore Dollar is the official currency of Singapore, and currently around US$33 billion worth of Singapore Dollars is traded every day on the Forex market. The Monetary Authority of Singapore is charged with regulating the nation’s currency and with issuing the bank notes in denominations of S$2, S$5, S$10, S$50, S$100, S$500 and S$1,000. The MAS also determines the country’s monetary policies at 2-weekly meetings of the Monetary and Domestic Markets Management Department. This body manages the rate of exchange by intervening in the foreign exchange market, and by adjusting the liquidity in the banking system through liquidity facilities and money market operations. Statements on the nation’s monetary policy are released twice annually. The SGD is traded with many world currencies, with some of the most common being the US Dollar, the Australian Dollar and the Euro. It is also frequently traded with other regional currencies such as the PKR, BDT and BND. Not only is the Singapore Dollar legal tender in Singapore itself, but it is also “customary tender” in the state of Brunei as a result of the Currency Interchangeability Agreement, which also allows the Brunei Dollar to be acceptable as currency in Singapore.
Historical Facts About the Singapore Dollar
During the period 1845 to 1939, the currency in Singapore was the Straits Dollar, which was then replaced by the Malayan Dollar, and then the Malaya and British Borneo Dollar from 1953. This common currency was still in use when Singapore joined Malaysia in 1963; however, just 2 years after Singapore became independent from Malaysia in 1965, the monetary union that had been in existence between Brunei, Malaysia and Singapore was dissolved. The Board of Commissioners of Currency, Singapore was established in 1967, and began to issue bank notes and coins. However, until 1973 the Singapore Dollar could be exchanged at par with the Malaysian Ringgit, and to this day it is still interchangeable with the Brunei Dollar. Originally, the SGD was pegged to the Pound Sterling, but this came to an end in the 1970s when the Singapore Dollar became pegged to the US Dollar. This only lasted for a brief period as the economy of Singapore began to grow and develop, forging diverse trade links to a number of other regions and countries, and the country moved towards a currency peg against an undisclosed and fixed trade-weighted basket of currencies during the period 1973 to 1985. Singapore chose to operate on a Monitoring Band from 1985 which permitted the Singapore Dollar to float within a certain bandwidth of a central parity. It is, however, monitored closely by the MAS against a basket of currencies from some of the nation’s primary competitors and trading partners, in order to give the government extra control over imported inflation while ensuring that the country’s exports are still competitive.
Economic Outlook for Singapore
The economy of Singapore is a developed and trade-oriented one, with government-linked companies playing a key role. Singapore’s economy is one of the primary FDI (Foreign Direct Investment) financiers thanks to the stable political environment and the attractive climate for investment. The primary source of the nation’s revenue is exports, especially chemicals, electronics and services, with Singapore holding the position of the region’s hub for wealth management. There is a limited availability of arable land, which means that the country must rely on the agrotechnology park for its agricultural production, and water is also in scarce supply, making it a precious resource. Singapore is reliant upon the concept of intermediary trade to entrepôt trade, through buying raw materials and refining them for export, for example in their oil refining industry. Thanks to the country’s strategic port, Singapore is much more competitive than some of its neighbouring countries when it comes to these entrepôt activities, and the Port of Singapore is the world’s second busiest in terms of its cargo tonnage.
The country is a regional financial centre, offering excellent corporate banking facilities, and the biotechnology industry has also been heavily promoted, with millions of dollars having been invested to improve the sector’s infrastructure over recent years. The oil industry also contributes to Singapore’s GDP, and this has led to a boost for the nation’s chemical industry as well as the manufacturing sector for the oil and gas equipment industries. Singapore’s primary trading partner is Malaysia, with China, South Korea and Indonesia also being important to the economy. The nation’s main exports include food, petroleum products, garments, telecommunication apparatus, electronic components and transport equipment, with the principal imports being fabrics, iron, steel, chemicals, motor vehicles, crude oil and aircraft.
Primary Factors Influencing Singapore’s Economy
The main factor that comes into play when determining the value of the Singapore Dollar and the health of the nation’s economy is the value of raw materials and natural resources. Singapore relies heavily on imports of these materials in order to facilitate its intermediary trading, and therefore its export industry. When the price of raw materials goes up, there will be an impact on the country’s economy. Likewise, as the country is quite reliant upon its export market for a large portion of its GDP, the global value of and demand for its primary exports such as chemicals, services and electronics have a key role to play in determining the value of the currency.