The Singapore dollar (SGD), is one of the most actively traded currencies in Asia, thanks to the importance of Singapore as a financial and shipping hub in the region. The USD/SGD pair is of particular interest, as it measures the performance of the currency against the most liquid asset on the FX market – the dollar.

Many fundamental factors affect the performance of the SGD against the USD and vice versa, which includes the monetary and fiscal policies of the two economies, trade data, regional and international geopolitics, etc.

If you would like to learn more about the factors that affect currency performance, you can read a brief summary here about how FX trading works in simple words.

Fundamental factors affecting the performance of SGD

As with any currency, several key fundamental factors can greatly affect the sentiment of the market towards the asset, which has a chain reaction on its performance and overall attitudes towards the currency as an investment.

Some such factors include, but are not limited to, the following:

• MAS policies – The Monetary Authority of Singapore is the body that determines the monetary policy in Singapore to ensure price stability, which directly affects the interest rates of the SGD and the overall strength of the currency
• Foreign capital flows – Singapore is a global financial hub, which means that investors from all over the world invest in the country, which affects the exchange rate of the SGD against numerous other currencies of key trading partners, such as Indonesia, China, Japan, Malaysia, and others
• ASEAN – Singapore is a member of The Association of Southeast Asian Nations, or ASEAN, which is a union of 10 states in the Southeast Asian region. Developments and trade agreements between member states can affect the exchange rate of the SGD
• Liquidity and trading volume – The Singapore forex market is highly liquid, with significant trading volume driven by both local and international investors and traders

SGD against the USD – Trade and geopolitics

The reelection of Donald Trump and the attitude of the new administration towards free trade is likely to shift the economic fortunes of Singapore, which affects the performance of the SGD.

With plans to levy tariffs on foreign imports, coupled with the reshoring of U.S. manufacturing capacity, inflation is likely to rise in the U.S. in the coming years, while budget deficits may decrease. Such a policy may have a strengthening effect on the U.S. dollar, which will mean that the SGD underperforms against the USD.

The degree to which these changes materialize in 2025 remains to be seen. However, the overall market developments possible in 2025, coupled with the uncertainties on the market, are likely to have an adverse effect on the performance of the SGD, particularly against the USD.

The trade volume between Singapore and the United States amounts to $70 billion, with exports from Singapore to the U.S. reaching $28.9 billion. This volume is likely to become subject to tariffs under Donald Trump, which poses a significant challenge for Singapore and the SGD.

USD/SGD performance prediction for 2025

The USD/SGD exchange rate was 1.361 and experts forecast the exchange rate to reach as high as 1.44 towards the end of 2025, which further enforces the overperformance of the USD against other currencies, which includes the SGD as well.

However, it is also worth noting that the SGD is likely to regain some lost ground after 2025 – stabilizing back to the 1.35-1.38 range once again.

The degree of tariff implementation is by no means a certainty, but investors are likely to pay close attention to the U.S. trade policy, which will have direct effects on any trading partner of the country, including Singapore.

Conclusion

The performance of the SGD is unlikely to break any records in 2025. In fact, many investors expect the Singapore dollar to lose ground to the USD, with the exchange rate for the USD/SGD pair going from 1.36 to the 1.40-1.44 range.

This is mainly due to the increasingly protectionist sentiment of the incoming United States government under Donald Trump, with tariffs being the primary source of focus and affecting the trade between the United States and its trading partners, including the $70 billion trading volume with Singapore.