SINGAPORE DOLLAR (SGD) FX TRADING

For a country its size, it is amazing how the Singapore Dollar came to be one of the most traded currencies around the world. As of the end of the year 2008, the Singapore Dollar is the 13th most traded currency - ahead of the South Korean Won.

This is part is due to the Monetary Authority of Singapore (MAS), which has an unsaid aim of overtaking Hong Kong as the financial hub in Asia. There is still a long way to go however, as the Hong Kong Dollar (HKD) is traded 2.5 times as much as the Singapore Dollar (SGD).

Practically, the most frequent exchange for usage must be the Singapore Dollar/Malaysian Ringgit pair. Many Singaporeans cross into Malaysia over the weekend and public holidays due to the favorable exchange rate, which leads to plenty of moneychangers near both sides of the border. In the Forex market however, SING$ is most traded against the US Dollar - this is no surprise considering the globalization of Singapore's economy.

As the value of the SING$ is managed within a trade-weighted band (against a secret basket of
foreign currencies and weightages) rather than the conventional usage of interest rates, Forex traders will find it hard to monitor or predict the trading trend of the Singapore Dollar. Nevertheless, it is taken that the US Dollar, Renminbi as well as the Euro feature heavily into the formula for deriving the Singapore Dollar value.

Of course, the economic growth of Singapore is still an important factor that Forex traders will pay attention to. Singapore's economy has only showed modest recovery since the global financial crisis, which started in Oct 2008. There is still a lingering concern if Singapore can still muster the growth rates above 4%, which may then appreciate the Sing$.

Even with the integrated resorts (IRs) and casinos coming to Singapore in year 2010, Forex traders will probably not bet on the SING$ appreciation in the medium term