Guest Post

There have been several shifts in the forex market recently, with the Australian Dollar (AUD) experiencing rapid and sudden decline. This has been sharply contrasted by the rise of the Singapore Dollar (SGD), which has evolved steadily on the back of concerted commercial growth and a positive outlook in the Economic Development Board’s Industrial Production statement. This is creating a new and interesting dimension for forex traders, who may be able to capitalise at least in the quest for short-term gains.

The SGD and the Singapore Economy: Consistent Growth in 2014

In terms of specific performance figures, Singapore’s industrial production sector expanded by 0.2% in October, with year-on-year growth only just falling slightly short of the analysts’ forecast of 0.6%.  Despite brief periods of fluctuation, the biomedical manufacturing sector in Singapore recorded annual growth of 22.5%, while pharmaceutical segments also rose by a healthy rate of 24.3%. Alongside significant expansion in the technology sector, this has created a strong economic proposition that has driven a significant rise in the value of the SGD.

This can be contrasted sharply with the performance of the AUD, which is often traded as part of a pair with the Singapore Dollar. While it is fair to say the SGD has held a significant advantage over the AUD since the final embers of 2012, however, in recent times the distance between the two has widened with the latter falling to depressing four year lows recently. This at least provides clarity for traders in the forex market, who can capitalise on the falling demand for Australian commodities and the sense of global economic uncertainly to back the often unheralded SGD.

In Summary: The Big Picture for Forex Traders

With this in mind, we are likely to see a growing number of traders back the SGD in the near future, especially with the trend for Singapore economic growth likely to remain prominent during the first financial quarter of 2015 at least. Alongside a declining AUD, this offers a transparent vehicle for short-term gains and relatively secure trades.

Going forward, however, it will be interesting to see whether the Australian economy can recover and gain a position of strength among its Asian trading partners such as China, India and to a lesser extent Japan. Without this, the SGD is likely to remain the Asia-Pacific currency of choice for forex traders who are looking to maximise their income in the current marketplace.