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Singapore Dollar Outlook USD/SGD

While Singapore will face several years of slow growth and moderate inflation MAS is likely to continue with its policy of letting the Singapore dollar rise against the currencies of its main trading partners.

According to the MAS survey, the Singapore dollar is likely to end the year at 1.225 to the greenback before strengthening further to 1.200 by end-2013.

Our estimate is for the SGD to end 2013 around 1.1875. For Singapore GDP we expect it to outperform estimates and grow at 2% to 2.5%.

The Singapore Dollar is currently trading around 1.2210, this has been our best performing currency must own and has posted gains of 6.2% so far this year.

“The government has made it very clear that previous high growth rates boosted by the surge in foreign population is pretty much unsustainable,” Mark Tan, a senior economist at Goldman Sachs in Singapore, said at a briefing yesterday.

“The new way going forward really is to boost domestic productivity and the government has said we are in a period of lower growth as the economy transitions. In that transition phase, you are going to deal with higher wage cost, high inflation and slower growth,” he added.

Singapore’s economy grew by 4.9% in 2011 following a blistering 14.8% expansion in 2010.

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