What's in store for the SG dollar to AU dollar exchange rate in 2014?

I didn't sleep well for the last 2 weeks. That's the curse of a light-sleeper, we wake at the slightest disruption such as light or sound. Waking is not that bad if we can get back to sleep almost immediately but there are nights that we can't. During one of these nights, I decided to pay the toilet a visit. Sitting on the bowl is a boring thing to do so I read one of my emails in my half-asleep stupor. Normally I would have regarded these emails as spam and deleted them right off. It was a politely written email, good length, requesting to do a guest post on my blog. I replied with a one liner telling the sender to feel free. Sleepy people are rude, the convenient excuse.

Surprisingly Peter Lavelle did come back to me with a guest post and so I'll pin it up. It's well written, like I would expect from a professional economist writer. The information should be pleasing for you guys who are plotting a move out of Singapore. Alas, Peter Lavelle did not suggest what people like me, who is already in Australia, can do to minimise the damages of a falling AUD. Should we buy SGD now and buyback AUD in future or are there better means to protect ourselves? That's for us to find out.

Before that, I'll let you go through his article. I hope you'll enjoy it as much as I do.


Peter Lavelle
24 October 2013

What's in store for the SG dollar to AU dollar exchange rate in 2014?

If, like Nix, you're planning the big jump from Singapore to Australia, you'll likely need to exchange currencies. With this in mind, will 2014 be a good time to exchange Singapore dollars for Australian dollars? Find out, in the article below!

If you'll need to exchange Singapore dollars for Australian dollars next, the winds are in your favour! Right now, the Singapore dollar is at its lowest against the Aussie in 18 weeks, but that's all set to change as we greet the new year. Come the fifteenth year of the third millennium, the Singapore dollar should be far stronger against its Aussie counterpart. How come? Well, here are the 4 biggest reasons:

1. Singapore's currency chiefs, the Monetary Authority of Singapore (or MAS) want the Singapore dollar to rise.

Last month, the MAS told financial markets it will "maintain its policy of a modest and gradual appreciation" of the Singapore dollar. Now, if you plan to exchange Singapore dollars, that should be music to your ears, because it means the currency is likely to strengthen versus the Aussie!

2. Singapore's economy is seemingly impervious to the global financial crisis.

Singapore expanded +5.1% between July and September compared to 12 months ago, a rate that would make policy makers from the United States to the Eurozone green with envy. Given this, Singapore is a super-attractive destination for investors looking to make money, which means they'll buy Singapore dollars, and the currency will rise!

3. Australia's economy has slowed abruptly in the last 6 months, say Westpac.

Whereas in 2010 the "Lucky Country" was expanding 4.0% a year, these days it's lucky to eke out 2.0%. What's more, unemployment in Australia is forecast to rocket +0.6% to 6.25% by next June. Given that, investors look set to abandon Australia like rats from a sinking ship, selling their Aussie dollars as they go. And that means the Australian dollar will weaken.

4. America's Fed will soon end its currency-inflation stimulus.

Since 2012, America's Federal Reserve has been pumping billions into the global economy, much of which has inflated the Australian dollar like a hot air balloon. Now the central bank is talking about ending that stimulus, well, the Australian dollar will go down with it. Which will give you a better exchange rate when you go to Australia.

With all this in mind, 2014 should be a great time to exchange Singapore dollars for Australian dollars!

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Yours kindly,

Peter Lavelle

Pure FX