Asian currencies, with the exception of a rare few, suffered major depreciation over the past few years.
The decline was broad-based with almost every currency in the region falling by at least 10% against the U.S. dollar and other major currencies.
One notable, heavily-traded currency was hit harder than most though: the Singapore dollar.
Many investors consider Singapore as a safe jurisdiction to store their wealth. It’s Southeast Asia’s unofficial financial hub and among the richest nations on the planet too.
The Singapore dollar nonetheless fell from recent highs of 1.20 against the U.S. dollar to 1.45 in early 2017. That’s a significant depreciation of more than 20%.
With that said, I’m now bullish on the Singapore dollar’s future after several years of steep decline. It’s now on an uptrend and should continue its rise well into the new decade.
Keep reading to learn more about one of Asia’s best currencies – at least until very recently – and why you might want to consider owning some.
Singapore’s Strong Record of Growth
A robust economy directly helps a nation’s currency too. The good news is that both the Singapore dollar and Singapore itself have an established history of growth.
Most readers are probably familiar with Singapore’s story. In the 1800s, they were a British colonial backwater infested with malaria and filled with opium dens. Today, they have the third highest GDP per capita on earth.
Singapore has also kept up their impressive growth rate, despite becoming a developed country long ago. The city-state’s economy averaged annual GDP growth of 5.4% since the start of this decade.
Now, compare that to 2.1% in the United States and barely over 1% in the European Union.
This record spanning many years wasn’t without occasional hiccups. Every economy has problems. However, Singapore’s long-term trends are very clear.
Despite recent weakness, anyone who held onto Singapore dollars since the beginning of the 21st century is now sitting on gains in excess of 20% against the Euro and U.S. dollar.
Once you consider other factors like strong export numbers and Chinese capital flight, a bullish case for Singapore’s dollar is clear.
Few Safer Alternatives
Forex markets are a zero-sum game for the most part. One currency’s performance largely depends on others.
Because of this, let’s take a look at the two most commonly traded currencies: the U.S. dollar and Euro.
The United States is going through a period of rate hikes for the first time since the 1980s. As a result, bond yields and the U.S. dollar began plummeting. These trends should continue if the Federal Reserve follows through with its rate hike plans.
Last year, the European Union lost its second largest member. Global confidence in the Eurozone was shaken as a result while respected geopolitical think-tanks are now warning about its inevitable collapse.
Meanwhile, other Asian financial hubs can’t compete either. Hong Kong’s dollar is pegged against the U.S. dollar. The yen is backed by an indebted, weak economy. The yuan is stuck between poor export numbers and allegations over currency manipulation.
The Singapore dollar is left standing.
Singapore Dollar on Blockchain?
Most nations hate the very concept of cryptocurrencies and the blockchain technology they’re based on. Governments generally consider them a threat to their own system.
But Singapore is one of the friendliest places in the world toward cryptocurrencies. They even have a goal of putting the Singapore dollar on blockchain soon.
Blockchain’s self-correcting, incorruptible nature would help install confidence in the Singapore dollar’s stability. Buyers would trip over themselves to buy the first widely-traded, mainstream currency backed by the technology.
You may or may not believe cryptocurrencies like Bitcoin warrant a price of more than US$10,000.
Regardless, the technology behind them is here to stay. The first country to adopt blockchain will lead the pack and reap the rewards.
Skip the Next Western Recession
Learn the best places to invest – and where to avoid – by downloading our free Investment Cheat Sheet.
- Foreign Property Ownership in Asia: Your 5 Best Options - 07/12/2017
- Why the Singapore Dollar is Undervalued - 03/12/2017
- Investing in ASEAN: Best Move of The Decade? - 30/11/2017
- 4 Worst Countries for Investors in Asia - 23/11/2017
- 3 Easiest Places to Start Investing in Asia - 14/11/2017
- Investing Offshore? Don’t Make These Mistakes - 09/11/2017
- Why I’m Positive About Malaysia Real Estate - 03/11/2017
- Thai Real Estate: Popular But Overvalued - 29/10/2017
- Want to Avoid Recession? Invest in These 3 Markets - 26/10/2017
- Don’t Buy Bonds: Asset Allocation Has Changed - 21/10/2017