SGD vs USD: Why more Singaporeans are diversifying in US Dollar

The US Dollar has been in the spotlight again, with recent headlines remarking on its weakness. This is significant because weakness in the Dollar also means other currencies strengthen against it – opening up interesting opportunities for the savvy investor.  

The reason for the current bout of softness? Trump’s global trade tariffs, which as of writing) start from 10% for most countries, and range up to 245% for China. Yikes! But while the economic rationale behind these tariffs are in question, their negative impact clearly isn’t. 

With Trump launching tariffs against practically every country, the soft landing that the US Federal Reserve has long strived for now seems more unlikely. 

J P Morgan Research recently raised the probability of a US recession occurring in 2025 to 60% – up from 40%. This is a chillingly prescient prediction given how the US economy just suffered its worst first quarter since 2022 with GDP contracting by 0.3%. 

But here’s why you should care: With confidence in the US Dollar flagging, the Singapore Dollar has emerged as a winner in the forex markets. And the possibilities are tantalising. 

What US Dollar weakness means for Singaporean investors

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As you can see from the screenshot above, USD/SGD is currently at five-year lows, trading at 1.2971 at the time of writing. In layman terms, this means that USD 1 is now worth SGD 1.29, a significant drop compared to two years prior, when USD 1 was worth SGD 1.43!

Importantly, this has happened before. In mid-2011, the USD/SGD currency pair fell as low as 1.22, and then again in the last quarter of 2012. However, the greenback soon recovered, leaving Singaporeans facing higher exchange rates once more.

And now, USD has dipped to another historic low against SGD, creating an opening for Singaporeans to diversify their cash holdings. However, do bear in mind that past performance is not indicative of future results.

Is now the right time to buy USD?

Well, you know what they say about the markets: History seldom repeats itself, but it often rhymes.

The current drop in USD/SGD is an exciting development for Singaporean investors. If you believe in the US Dollar, here’s your chance to load up for a potential eventual payoff when USD reverts to its former dominance. 

But hang on. What about the fact that analysts are convinced the Singapore Dollar will maintain its strength over the short term? There’s even a particularly exuberant prediction calling for parity with the US Dollar (where USD 1 = SGD 1). 

Well, here’s why I don’t think that’s likely to happen. 

Firstly, the Singapore Dollar being too strong is not a good thing. As one of the top exporters in the world, a strong SGD renders our exports more expensive, reducing our global competitiveness and hampering our economic growth. This is partially why the Monetary Authority of Singapore regularly makes adjustments to keep SGD from becoming too strong.

Secondly, Trump’s tariffs will inevitably raise prices for US consumers, leading to higher inflation. When this happens, the US Federal Reserve will once more raise interest rates (or at least, maintain the current rates) in an effort to bring inflation back under control. 

When interest rates are raised, US Treasuries pay out higher coupon rates. This is likely to restore the attractiveness of the US Dollar, once more increasing demand for the USD. 

Earn up to 4.6% p.a. on your USD while you wait 

What’s clear is that the USD is likely to languish for now, as the market waits to measure the true impact of the trade tariffs. But that doesn’t mean your personal USD investment has to be boring too. 

Liven things up with Chocolate Finance, which is now offering up to 4.6% p.a. on your USD balance! 

Here’s how it works:

• Convert your SGD balance to USD. You can do so right in the Chocolate Finance app.
• Earn 4.6% p.a. on your first US$20,000
• Earn 4.2% p.a. on your next US$30,000
• And a target 4.2% p.a. on any amount thereafter

Earn these returns on your USD balance everyday. All this with just a few taps in the app.

Why choose Chocolate Finance for USD diversification?

Apart from the returns of up to 4.6% p.a., you will also enjoy the same awesome benefits on your USD balance you’ve come to love from the Chocolate Finance SGD account. 

Yes, you will earn daily returns on your USD balance, starting from the very next day on your first US$50,000. (Amounts exceeding US$50,000 will start seeing returns in 3 to 5 business days.)

Also, there are no lock-ins, and you can make withdrawals at any time. You’ll need to convert your USD into SGD first – easily done right in your Chocolate Finance app.

Best of all, just like your SGD account, your USD account is also covered by the Chocolate Finance Top-up Programme, where during the Qualifying Period, if they don’t make the target returns for your first US$50k (currently 4.6% p.a. on the first US$20,000, 4.2% p.a. on the next US$30,000, and a target 4.2% p.a. on amounts thereafter), they top up the difference.

Don’t miss out on happy returns

Between the historic low of the USD, and Chocolate Finance’s top-up returns of up to 4.6% p.a., this is an opportunity for Singaporean investors to diversify into USD to boost their savings while enjoying the convenience and safety of Chocolate Finance. 

In case you’re unaware, Chocolate Finance is a fund manager, not a bank and all customer funds are held by the appointed fund custodians of the underlying unit trust investments – HSBC and State Street – ensuring that your money remains safe and protected. 

Disclaimer

Chocolate Finance is a brand of Chocfin Pte Ltd (UEN 202347190R). Chocfin Pte Ltd is licensed and regulated  by the Monetary Authority of Singapore. The views and opinions expressed on this post are solely those of the original authors and contributors as of the date of this post and are subject to change based on market and other conditions. This is for information only and does not constitute an offer or solicitation to buy or sell any of the investments mentioned. Neither Chocfin Pte. Ltd. (“Chocfin”) nor any officer or employee of Chocfin accepts any liability whatsoever for any loss arising from any use of this blog or its contents.

Please note that Chocfin does not guarantee the accuracy, relevance, timeliness, or completeness of the information provided on this post. The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them. This post was prepared without regard to your specific investment objectives, financial situation, accounting or tax needs and does not constitute advice. Before applying you should consider carefully whether the product/service is suitable for you.

The 4.6% p.a. return on the first US$20k and 4.2% p.a. return on the next US$30k provided by Chocolate Finance are currently supported by a promotional 'Top-Up Programme', valid during the Qualifying Period and subject to T&C’s. Returns are calculated on a compounded basis. Past performance is not indicative of future results. Terms and conditions apply. Please refer to our full disclaimer at www.chocolatefinance.com/#risk-and-disclaimer.

All investments involve risk, including the risk of losing all of the invested amount. Such activities may not be suitable for everyone. This advertisement has not been reviewed by the Monetary Authority of Singapore.