A country’s currency can truly reflect many aspects of its situation. Through an analysis of the Singapore dollar, let’s see if this country is trustworthy and suitable for living, while also understanding the risks we should avoid.
In this article, we will discuss what a strong currency means for a country and compare the Singapore dollar with other major currencies. We will analyze Singapore’s bold managed float exchange rate system and understand how the flexibility of the Singapore dollar has increased the nation’s wealth. At the end of the article, we will also discuss salary levels in Singapore.
Table of Contents
Singapore Dollar vs. Euro: Which is Stronger?
According to the current exchange rate, 1 Singapore dollar = 0.624352 Euro. From this, it appears the Singapore dollar is not stronger than the Euro.
However, to determine a currency’s strength, one must look beyond purchasing power to its inflation rate. In fact, the Singapore dollar is one of the strongest currencies in the world.
To understand this, we first need to know what kind of currency the Singapore dollar is.
What Kind of Currency is the Singapore Dollar?
In 1965, Singapore left the Federation of Malaysia and declared itself an independent republic. In 1967, following the devaluation of the British pound, the Board of Commissioners of Currency, Malaya and British Borneo, ceased issuing the Malayan and British Borneo dollar, and Singapore began issuing its own currency—the “Singapore dollar.”
Initially, the Singapore dollar was pegged to the British pound and the US dollar. Soon after, Singapore adopted an innovative monetary strategy: pegging its currency to a trade-weighted basket of currencies.
As Singapore has a trade-driven economy, this innovative monetary strategy successfully stabilized the Singapore dollar’s exchange rate.
The Monetary Authority of Singapore (MAS) manages inflation by supervising the exchange rates of the foreign currencies to which the Singapore dollar is pegged.
Therefore, even in times of crisis, the Singapore dollar does not weaken (significantly) and remains competitive.
For those living in Singapore or looking to start a new life here, this is undoubtedly a clear advantage.
What is the World’s Most Valuable Currency?
The most valuable currency in the world today is the Kuwaiti Dinar (KWD):
- 1 KWD = 3.26 USD
- 1 KWD = 4.521153 SGD
The high value of Kuwait’s currency is due to the country’s massive oil exports. Located in the heart of the Persian Gulf, bordering Saudi Arabia to the south and Iraq to the north, Kuwait is extremely rich in oil resources.
What is the World’s Strongest Currency?
The world’s strongest currency is still the Kuwaiti Dinar.
As mentioned earlier, a strong currency is not just about high value; it also remains stable in the face of inflation.
The value of the Kuwaiti Dinar is based on the country’s oil resources, which are tangible and high-demand assets. Therefore, the Kuwaiti Dinar can weather various crises with ease.
What About Gold and Bitcoin?
Firstly, gold is not a currency; you cannot use it directly. To shop or make purchases, it must be exchanged for fiat currency.
Secondly, although Bitcoin is touted as a virtual “currency,” its high value is a prerequisite for its acceptance.
The problem with Bitcoin is its fragility and instability; it does not respond well to real-world crises. Moreover, Bitcoin does not possess the characteristics of a traditional currency:
- As a unit of account for wealth. Instead, everyone uses the US dollar to express the value of Bitcoin.
- As a medium of exchange. Very few stores accept Bitcoin, and even those that do convert it into fiat currency.
- As a store of value. Most people are cautious about using Bitcoin as a means of storing wealth.
How does the Singapore dollar perform in these aspects? Let’s continue our analysis:
How Does the Singapore Dollar Perform as a Currency?
The Singapore dollar is a robust currency for the following reasons: The Singapore dollar has strong purchasing power. Although not as strong as the Euro, it is comparable to the US dollar. When compared with other major currencies in the world, you will find that the Singapore dollar’s purchasing power is quite strong.
1. The Singapore dollar is based on real wealth. Singapore is a high-tech country with a strong economy, a global financial hub with powerful export capabilities. The Monetary Authority of Singapore holds sufficient reserves of gold, silver, foreign exchange, and other assets to back the value of the Singapore dollar. Consequently, property prices in Singapore are very stable, attracting many overseas investors.
2. The Singapore dollar has low inflation risk. Compared to other countries, the Singapore dollar faces a lower risk of an inflation crisis and has a higher chance of weathering potential crises. One reason is that the Singapore dollar is pegged to a basket of different currencies, and another is the strong regulation by the Monetary Authority of Singapore. Of course, the most important reason is that Singapore invests heavily in creating a high-tech, modern nation that manufactures and exports high-tech products.
3. The Singapore dollar is stable. Based on the two conditions above, the Singapore dollar does not fluctuate much. Therefore, more and more overseas individuals are converting their wealth into Singapore dollars to preserve its value.
What Does This Mean for People Living in Singapore?
The Singapore dollar is the twelfth most traded currency in the world, while the Chinese Yuan is the eighth. This fact highlights the interest of investors in both the Singapore dollar and the Chinese Yuan. However, considering the exchange rate of 1 SGD = 4.77 CNY, it is much cheaper for people living in Singapore to travel to China than it is for people in China to travel to Singapore.
Furthermore, the Singapore dollar’s resistance to weak or volatile political situations adds to its stability. This means that during a financial or health crisis, your risk of income loss is lower. Moreover, even if you do face risks, the Singapore government can provide more financial support than other countries.
Overall, Singapore is a trustworthy country and very suitable for family life.
But the Singapore Dollar Isn’t as Strong as the US Dollar or Euro. Is That a Bad Thing?
In theory, living in a country with a high-value currency means you have more disposable income, allowing you to buy more than just the necessities. A high-value currency also means the country can import goods at a lower price, so you can purchase these goods for less.
Singapore mainly imports various goods from China, Malaysia, and the United States, and primarily exports to mainland China, Hong Kong, the United States, and Malaysia.
This is the key point: imports and exports.
For example, the US dollar is stronger than the Singapore dollar, so it is cheaper for the US to buy goods produced in Singapore. If the Singapore dollar were stronger than the US dollar, the US would choose other countries as suppliers.
In contrast, Singapore has closer ties with its Asian neighbors, which means these countries are more likely to do business with Singapore.
Does the Singapore Dollar Have a Fixed Exchange Rate?
The Singapore dollar is pegged to a basket of currencies. These currencies are from Singapore’s most important partners and competitors, but their values vary depending on Singapore’s trade patterns.
Therefore, this basket of currencies is regularly adjusted, mainly based on Singapore’s business partners.
The official term for this exchange rate system is a “managed float.” The Monetary Authority of Singapore regulates this trade-weighted floating exchange rate, though it does not publicly disclose the policy band.
Does This Flexibility Negatively Affect the Exchange Rate?
While the flexibility of a currency introduces some risk of volatility, it also enhances Singapore’s ability to withstand global financial crises.
If the Singapore dollar’s exchange rate moves outside a pre-determined range, the MAS will intervene by buying or selling foreign currency to manage the rate.
This system has other advantages. For example, prices in Singapore are more stable, allowing the country to focus on steady growth. As a result, Singapore has no foreign debt, maintains a stable trade surplus, and has substantial fiscal revenues. This is also why the Singapore dollar has been appreciating against the US dollar for over two decades.
This means that Singaporeans can enjoy full employment, high incomes, and stable housing prices.
That is why Singapore is considered a reliable country, suitable for building a family and a career.
Does Singapore Print Money?
Yes, Singapore prints money.
Since the Singapore dollar is pegged to a basket of currencies, it is necessary to print money. In light of this, the Monetary Authority of Singapore needs to be very careful in adjusting the exchange rate value.
When the Singapore dollar depreciates, the MAS increases the amount of money in circulation; when it appreciates, it reduces the amount of money in circulation.
Is a Monthly Salary of SGD 7,000 Considered High or Low?
The average salary in Singapore is $5,783/month, so a monthly salary of $7,000 is quite good.
Of course, many other factors must be considered, such as the number of family members, standard of living, and your expenses.
For example, a $7,000 monthly salary is quite good for a single person but would be challenging for supporting a family of four. Here’s a look at some potential expenses:
- Rent/mortgage, ranging from $700 to $4,500 per month
- Public transportation at $120 per month
- Car maintenance costs from $550-$1,000 per month
- If you buy a car worth $50,000 with a 5-year loan, the monthly payment is $1,000
- Food expenses from $250 (cooking at home) to $2,000 (fine dining) per month
- Mobile data plan from $20-$60 per month
- Leisure and entertainment costs from $100-$2,000 per month
In summary, a single person can get by on $1,200 per month in Singapore if living frugally. However, if you pursue a higher quality of life and live more luxuriously, you would need at least $9,500 per person per month.
Singapore Dollar Exchange Rates
Let’s take SGD 7,000 as an example and compare the exchange rates with different countries:
| SGD to CNY 7,000 SGD = 33,438.05 CNY |
SGD to USD 7,000 SGD = 5,170.75 USD |
| SGD to AUD 7,000 SGD = 7,042.15 AUD |
SGD to HKD 7,000 SGD = 40,203.50 HKD |
| SGD to JPY 7,000 SGD = 567,189.00 JPY |
SGD to PHP 7,000 SGD = 258,616.47 PHP |
| SGD to EUR 7,000 SGD = 4,355.74 EUR |
Conclusion
The Singapore dollar is strong and stable because the country provides a stable and prosperous environment for its citizens. People living in Singapore can enjoy both a reliable financial environment and a social environment suitable for family life.
Strong monetary policy, world-leading technology, and remarkable export trade are the sources of the country’s wealth. In addition, Singapore also has very strong financial ties with the United States and its neighboring Asian countries.
As Singapore’s economy continues to prosper, it is foreseeable that the Singapore dollar will become even stronger.
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