Singapore is a prominent Asian city-state and global financial centre. It is recognised for its highly innovative and efficient economy. The Singapore dollar is one of the strongest currencies in the world, making it a popular choice for forex trading. This article will discuss the best currencies to pair with the Singapore dollar. You can also read more about currency pairs available for trading before you get started.
The value of the Singapore dollar
The Singapore dollar is currently trading higher against other global currencies.
As of June 2019, the Singapore dollar was worth $1.36 US dollars, making it one of the strongest currencies in the world. This high value is good news for residents of the country, as it makes imported goods cheaper and gives them more purchasing power when travelling overseas.
However, it can be challenging for businesses that export goods to other countries, as they may find their products less competitively priced. Nevertheless, the overall outlook for the Singapore dollar remains positive, and it will likely continue to trade at a high value against other global currencies.
What can be paired with the Singapore dollar?
The Singapore dollar is of the most traded currencies in the world, and traders can pair it with many different currencies. Each currency has its benefits and drawbacks and choosing the right one can be a complex decision.
The most common currencies to pair with the Singapore dollar are the US dollar, the Euro, and the Japanese yen.
The US dollar is the most popular, relatively stable, and easy to convert. However, it can be subject to volatility, and its value can fluctuate rapidly.
The Euro is another widely traded currency that offers a degree of stability like the US dollar. However, it can be less liquid than other options, making it more challenging to convert.
The Japanese yen is often seen as a haven currency, as it tends to appreciate during economic turmoil. However, it can be pretty volatile, and its value can fluctuate significantly.
Picking the correct currency to pair with the Singapore dollar requires carefully analysing each option’s benefits and drawbacks.
Things to consider when pairing currencies
When two currencies are paired together, traders must consider many factors to ensure the best return on investment. Traders are advised to read more about currency pairings before diving in and making decisions.
Perhaps the most crucial factor is the interest rate differential between the two currencies. Generally speaking, when the interest rates in one country are higher than in another, it will create demand for that currency and result in appreciation.
Inflation rates are also an important consideration, as higher rates of inflation will typically lead to the depreciation of a currency.
Lastly, economic stability is essential, as investors tend to shy away from countries with unstable economies. Considering all these factors, investors can make informed decisions when pairing currencies.
Paired currencies, ETFs, and mutual funds
Paired currencies, also known as currency pairs, are two currencies traded against each other. The most common currency pairs are the Euro and the US dollar (EUR/USD), the British pound and the US dollar (GBP/USD), and the Japanese yen and the US dollar (JPY/USD).
When investing in currency pairs, it is vital to remember that the value of one currency is directly affected by the value of the other currency. For example, if the EUR/USD pair is trading at 1.20, one Euro is worth 1.20 US dollars. If the value of the US dollar rose, then the Euro’s value would decrease.
Various investment vehicles are available when it comes to investing in currency pairs. Two of the most popular options are mutual funds and ETFs.
Professional fund managers manage mutual funds that invest in various assets, including stocks, bonds, and forex trading. ETFs are comparable to mutual funds but are traded on exchanges like stocks. Both options offer investors a way to diversify their portfolios and hedge against currency risk.
To that end
So, what are the best currencies to pair with the Singapore dollar? It is advisable to pair the Singapore dollar with solid and stable currencies. The US dollar and British pound sterling are two good examples of this.
Alternatively, suppose you are looking for higher returns on your investment. In that case, you could also consider pairing the Singapore dollar with emerging market currencies such as the Mexican peso or the South Korean won.