Moving funds to USD

[touchring1]

I've moved some of my funds to USD, thinking of converting more but need to eat the exchange loss. Anyone is thinking the same?

 

[reddevil0728]

Whats the objective? No head no tail

 

[CrashWire]

First thing that comes to my mind would be S$NEER:
https://www.todayonline.com/singapore/not-rappers-name-what-sneer-and-how-it-used-monetary-policy
If I'm not wrong, SGD will gradually appreciate over the years, which means that your USD will be worth less for Singapore purchases, especially if you intend to retire in Singapore in the future.

 

[hwmook]

First thing that comes to my mind would be S$NEER:
https://www.todayonline.com/singapore/not-rappers-name-what-sneer-and-how-it-used-monetary-policy
If I'm not wrong, SGD will gradually appreciate over the years, which means that your USD will be worth less for Singapore purchases, especially if you intend to retire in Singapore in the future.

Not entirely true because the SGD will appreciate against a basket and USD is just 1 inside the basket.

 

[thelittlemonkeye]

think of SGD as a weaker version of the HKD. HKD is a hard peg to the USD, SGD is a soft peg.

 

[BBCWatcher]

If I'm not wrong, SGD will gradually appreciate over the years, which means that your USD will be worth less for Singapore purchases, especially if you intend to retire in Singapore in the future.

The bond markets aren't convinced. For reference, here are the current (December 30, 2021) yields for 10 year benchmark government bonds in these two currency zones:

U.S. Treasury 10 Year: 1.52%
Singapore Government Security 10 Year: 1.65%

If financial market participants expect the Singapore dollar to strengthen versus the U.S. dollar over the next several years then we would expect to see a lower yield on the SGS, other things being equal. But we don't; we see the opposite.

One possibility is that, despite the letter bond ratings, investors collectively feel more confident about U.S. Treasuries from a credit risk point of view. So the SGS has a risk premium priced into it despite an expectation of slow Singapore dollar appreciation. But I think that's a tough argument to make.

Another possibility is that bond investors simply don't believe the Monetary Authority of Singapore (over this span of time anyway). For example, they might be pricing in another global or regional recession when the MAS significantly alters its monetary policy. They might believe that the MAS won't actually want to make Singapore progressively less export competitive, which is what a strengthening currency would do. Or some other explanation. But right now the market consensus seems to be pointing to relative U.S. dollar-Singapore dollar exchange rate stability, perhaps with a very little bit of USD strengthening versus the SGD.

Just for fun, let's look at today's USD/SGD exchange rate and the rates at a few past intervals:

Now: 1.35225
1 Year Ago Today: 1.32425
2 Years Ago Today: 1.34904
3 Years Ago Today: 1.36555
4 Years Ago Today: 1.33646

Is that a Singapore dollar appreciation trend? I dunno. The Singapore dollar was stronger a year ago, two years ago, and four years ago. Maybe the plain, naive reading of the bond markets is that they're correct in their forecast?

 

[touchring1]

Not entirely true because the SGD will appreciate against a basket and USD is just 1 inside the basket.

Yes, in the past SGD was strong, that was during LKY time, 1990s-2000s, when our financials were rock solid. Not so today. Should there be a US stock market correction, which many expects next year, USD will appreciate.

The issue isn't whether to buy USD but rather how much to allocate.