Singapore dollar enjoys safe-haven features. But it’s no greenback or yen

In times of uncertainty, investors resort to safe-gold-gold armed assets, as well as currencies such as the Japanese yen, the US dollar and the Swiss franc. These assets are expected to maintain or increase their value during the periods of market turmoil.

While Greenback is still backup in the favorite world, it was weakened. The dollar index has decreased more than 9 % so far. The Japanese yen expectations have been cloudy due to commercial concerns. Against such a background, analysts note that there may be an alternative to making: the Singaporean dollar.

Christopher Wong, a FX strategic expert at OCBC CNBC that SGD is already working as a “semi -safe” currency, especially inside Asia and emerging markets.

“While it does not have the same global situation as traditional safe havens such as the dollar, JPY [Japanese yen] Or a Swiss franc [Swiss franc]SGD tends to show defensive characteristics during financial stress rings – especially those stationed in Asia. Wong said.

SGD has been strengthened against the dollar, where it got about 6 % years so far, with Jefferies It is said Prediction that the currency can reach parity with the dollar in the next five years.

“SGD is actually one of the safe havens in the world, but it may not be” the following safe haven, “according to omar Slim, the head of fixed income in Asia in Pinebridge Investments.

“What makes it a safe haven is the strength of the institutional framework in Singapore, solid and flexible economic institutions in Singapore, as well as making strong policies, especially when it comes to financial wisdom,” he said.

Felix Brill, the chief investment official of VP Bank, agrees that SGD has many modern safe haven properties, including total economic stability, strong institutions, a major surplus in the current account, and low political risks.

Braille said that the monetary policy framework in Singapore has provided “exceptional stability” to the currency, which is exactly what the safe haven flows seek.

Unlike most countries, Singapore does not use interest rates to manage its currency, but instead strengthens or weakens the Singaporean dollar against a basket of its main commercial partners in the Politics Squad. The precise exchange rate has not been set, but SGD can move within the scope of the specified policy, whose fine levels have not been detected.

Jeff NG, head of Asia’s total strategy at Sumitomo Mitsui Banking Corporation, estimates that the policy range is 4 % width, and he said that this management of SGD means that there are limited fluctuations, which gives low risks and more certainty in the short term.

The first is the size of the SGD market. Data from Bank of International settlements in 2022 It revealed that the US dollar constitutes 88 % of the Forex market, while the Swiss yen and francs make up 17 % and 5 %, respectively. The Singapore dollar represents only 2 %. BIS survey is made every three years, and is scheduled to take place in September 2025.

“Although Singapore is very respectful, it has a small economy, and SGD does not have trading volume or depth of the bond market for yen or franc.”

Moreover, it is the monetary policy that Singapore has provided an exceptional stability of SGD is the thing that restricts it.

Brill explains because the currency is “managed”, it limits market speculation and widespread positioning, which in turn puts liquidity and depth. These are the main features that investors are searching for in a real, global safe haven.

“Yes, this framework helps to credibility – but hinders the range,” Braille said.

Other factors include export -based economy in Singapore. Numbers from the World Bank show that exports are formed 178.8 % of the country’s gross domestic product in the city In 2024.

As such, the Monetary Authority in Singapore may not have a delicious SGD to estimate a lot, according to the Naguin, chief economist at Natixis Corporate & Investment Banking.

“If investors bought a lot of SGD assets, this would lead to a SGD level,” Ngawen pointed out, adding, “If SGD becomes non -competitive … MAS will not tolerate that as he sees that it harms the ability of competitiveness in Singapore.”

SGD can be used to relieve currency risks. Jean -Xia, chief global investment official at Singapore Bank, said that SGD can play “a very important part of diversification … so this may be the third currency in many currency diversification discussions.”

Experts agreed that the Singapore currency bears the ability to gradually obtain the equivalent status of the condition of the Swiss franc, if not the yen or green.

Brill from VP Bank pointed out that a safe haven is designed over decades of crisis response behavior, and while SGD was good during the Asian retreat period, it was not the first port of communication during the global slowdown.

“Over time, this largest international use, the local markets that are accessible, and the gradually consistent stability can change,” Brale said.

Pinebridge Slim is also optimistic about the future of SGD at a time when the gravity of traditional safe havens have succeeded: “The world is increasingly looking for safe havens, and I expect SGD to be at the top of that list … while it may not become what USD and JPY may not become traditional, it will be increasingly seen as a cluster performance in Asia.”

Jin I Choa, an Asian research analyst in Julius Bayer, seemed more optimistic, saying that she does not rule out the possibility that SGD would develop as a safe haven for Asia until she becomes universal, but it may take some time.