Have you ever wondered why Singapore Dollar is so strong?


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Jedi

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Jul 17, 2002
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#1
Singapore is celebrating its 50th birthday this year. For the past 50 years, our Singapore dollar is so strong comparing to ASEAN countries.

Given that Singapore has zero natural resources, how do Singapore build its wealth over the 50 years period? For example, just look at our neighbor Malaysia which is suffering a plunged in currency. Current forex rate is RM 2.67 = S$1. On the same note, what happened to Malaysia for the last 50 years. This is why hundred of thousands of Malaysians are pouring to Singapore to work. They can live comfortably back in Malaysia after working in Singapore.

Based on the statistics published by MAS, Singapore foreign reserves stand at US$256.86 billions. That is a hell lot of money. Singapore may be very rich but the citizens are definitely not in that league. I remember that our government has reiterated many times that the government shouldn't touch the reserves unless it is really necessary. The main reason cited was to defend our Singapore dollar. Indeed, no speculator dare or at least think twice before they want to speculate the Sing dollar.

Interestingly, among ASEAN, Singapore is the richest member followed by Thailand. In fact, Singapore ranked no. 10 in terms of foreign reserves in the world.

Singapore - US$256.86 billions
Thailand - US$157.11 billions
Malaysia - US$116 billions
Indonesia - US$111.86 billions
Philippines - US$78.68 billions
Vietnam - US$32.49 billions
Burma - US$8.28 billions
Cambodia - US$5.4 billions
Laos - US$846 millions

Many people claimed that due to corruption, most of the ASEAN memebers couldn't build their wealth. Our closest neighbor Malaysia is so rich in natural resources , yet the country couldn't build it wealth. How ironically.

Singapore is the smallest country in ASEAN but the richest. It is amazing that Singapore can build such a massive reserves over 50 years. How do Singapore achieve it? What do you think? :think:
 

Andreq

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Jul 12, 2007
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#2
Actually is there any "idiot's guide" or good book to recommend that explains how all the currency fluctuations work for a layman to understand without difficulty? For eg, what are the factors that determine the conversion rate on a daily basis? Did you all learn this in Economics?

Me a noob here to this! ;P
 

ArchRival

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Sep 17, 2006
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Sg dollar is strong because Sg has no natural resources and needs to import. Strong dollar makes imports cheap. But the dollar cannot be too strong because finished goods and services still must be cheap enough to export. If i'm not wrong MAS actively maintains the value of SGD within a band through buying and selling on the market.

These kind of things you all should know. Because this was one of the most fundamental aspects of our economy set up by sg's pioneers.

Lately i met some scholars (phds in engineering) who think they damn smart. They were discussing the housing bubble, they said sg should raise interest rates to discourage people from borrowing, hence cooling the housing market.

What they don't know is if there is a great discrepancy in Sg's interest rates compared to international interest rates, there will be massive amounts of money flowing in or out of sg, i.e. the carry trade. If sg's interest rates are higher, hot money will flow in. People in the US, Europe or China will borrow massively and park the money here and simply make profits off the interest. This will affect the value of your sgd and screw your import/export, hence screwing your economy. And sg is small, a massive carry trade will kill you.

For this reason, sg does not have the freedom to set interest rates.

And you all should be worried, because the next generation of scholars do not know A level economics, but are put in positions to make policies. The problem here isn't their opnion on the policy, but their lack of knowledge behind the reasons for the policy. In fact, the idea of sg setting own interest rates was being lobbied by some groups awhile back.

:bsmilie:
 

Big Kahuna

Senior Member
Dec 15, 2004
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#4
That's why Sg needs to transform from manufacturing into high value service industry....such as banking....tourism....gaming...Mice...etc.....look at Swiss...they are already in that situation for decades....perhaps we shouldn't complaint why Sg is so expensive....there is a reason for every action ;p
 

Nikonzen

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Nov 3, 2014
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#5
It is all about trust and confidence. Singapore has managed this well and so gets the treasure. That trust and confidence is Singapore's economic backbone.

It's like the stories you hear of meeting some old Chinese man and saying I am from Singapore.You have your house in order no crime no corruption. The truth could be eight shades different and it wouldn't matter because the perception is there and strong as ever. If you lose the trust and confidence...not good.
 

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Dfive

Senior Member
Nov 20, 2008
3,141
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Singapore lah....
#6
Singapore is celebrating its 50th birthday this year. For the past 50 years, our Singapore dollar is so strong comparing to ASEAN countries.

Given that Singapore has zero natural resources, how do Singapore build its wealth over the 50 years period? For example, just look at our neighbor Malaysia which is suffering a plunged in currency. Current forex rate is RM 2.67 = S$1. On the same note, what happened to Malaysia for the last 50 years. This is why hundred of thousands of Malaysians are pouring to Singapore to work. They can live comfortably back in Malaysia after working in Singapore.

Based on the statistics published by MAS, Singapore foreign reserves stand at US$256.86 billions. That is a hell lot of money. Singapore may be very rich but the citizens are definitely not in that league. I remember that our government has reiterated many times that the government shouldn't touch the reserves unless it is really necessary. The main reason cited was to defend our Singapore dollar. Indeed, no speculator dare or at least think twice before they want to speculate the Sing dollar.

Interestingly, among ASEAN, Singapore is the richest member followed by Thailand. In fact, Singapore ranked no. 10 in terms of foreign reserves in the world.

Singapore - US$256.86 billions
Thailand - US$157.11 billions
Malaysia - US$116 billions
Indonesia - US$111.86 billions
Philippines - US$78.68 billions
Vietnam - US$32.49 billions
Burma - US$8.28 billions
Cambodia - US$5.4 billions
Laos - US$846 millions

Many people claimed that due to corruption, most of the ASEAN memebers couldn't build their wealth. Our closest neighbor Malaysia is so rich in natural resources , yet the country couldn't build it wealth. How ironically.

Singapore is the smallest country in ASEAN but the richest. It is amazing that Singapore can build such a massive reserves over 50 years. How do Singapore achieve it? What do you think? :think:
And all that SG wealth is owned by the Singapore Royal Family ! the L## family.
 

Andreq

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Jul 12, 2007
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#7
perhaps we shouldn't complaint why Sg is so expensive....there is a reason for every action ;p
Opps... :) I humbly disagree. Citizens should have the right to raise their opinions on such matters. Of course, it has to be justified, not some common whining, govt bashing.

Had it not been for the many complaints a couple of years back on how expensive HDB flats were (still are expensive now but not as bad as previously), I dread to think what the situation would have been right now. We might be seeing many more people queuing up to ballot for flats. Resale and new flat prices might have shot thru the roofs.

Only thru continual intense pressure from the citizens did the govt woke up from going overboard in their lack of infrastructure planning.
 

Zenten

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Jun 13, 2004
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#8
Singapore is the smallest country in ASEAN but the richest. It is amazing that Singapore can build such a massive reserves over 50 years. How do Singapore achieve it? What do you think? :think:

We are heavily taxed? .................... :)
 

UncleFai

Senior Member
Mar 10, 2010
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#9
According to MAS:

"... the Singapore dollar is managed against a basket of currencies of our major trading partners and competitors. The various currencies are assigned weights in accordance with the importance of the country to Singapore’s trading relations with the rest of the world. The composition of the basket is revised periodically to take into account changes in trade patterns."

What MAS failed to say is that the basket is top secret - outsiders will never know the exact composition and weights.
 

hanzohattori

Senior Member
Apr 16, 2010
999
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#10
That's why Sg needs to transform from manufacturing into high value service industry....such as banking....tourism....gaming...Mice...etc.....look at Swiss...they are already in that situation for decades....perhaps we shouldn't complaint why Sg is so expensive....there is a reason for every action ;p
swiss is in pain right now.. export and tourism will plummet :)
 

Jedi

Senior Member
Jul 17, 2002
5,294
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38
Visit site
#11
Sg dollar is strong because Sg has no natural resources and needs to import. Strong dollar makes imports cheap. But the dollar cannot be too strong because finished goods and services still must be cheap enough to export. If i'm not wrong MAS actively maintains the value of SGD within a band through buying and selling on the market.

These kind of things you all should know. Because this was one of the most fundamental aspects of our economy set up by sg's pioneers.

Lately i met some scholars (phds in engineering) who think they damn smart. They were discussing the housing bubble, they said sg should raise interest rates to discourage people from borrowing, hence cooling the housing market.

What they don't know is if there is a great discrepancy in Sg's interest rates compared to international interest rates, there will be massive amounts of money flowing in or out of sg, i.e. the carry trade. If sg's interest rates are higher, hot money will flow in. People in the US, Europe or China will borrow massively and park the money here and simply make profits off the interest. This will affect the value of your sgd and screw your import/export, hence screwing your economy. And sg is small, a massive carry trade will kill you.

For this reason, sg does not have the freedom to set interest rates.

And you all should be worried, because the next generation of scholars do not know A level economics, but are put in positions to make policies. The problem here isn't their opnion on the policy, but their lack of knowledge behind the reasons for the policy. In fact, the idea of sg setting own interest rates was being lobbied by some groups awhile back.

:bsmilie:
Since you are a guru, can you tell how did Singapore manage to make so much money and accumulate so much wealth over the last 50 years? Look at our neighbors which are so rich in natural resources but still cannot catch up Singapore.
 

Nikonzen

Senior Member
Nov 3, 2014
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#13
swiss is in pain right now.. export and tourism will plummet :)
Guess they will have to go skiing or just sit at home counting euros which are on sale two for one...the poor Swiss (sarcasm)...LMAO

No thanks I will visit Singapore before I ever go to Switzerland...my people left that place behind for a reason and I assume it was a good one. :)
 

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