The Singapore dollar enjoys the features of the safe Havana. But it’s not green or yen

In times of uncertainty, investors turn to assets for safe asylum-gold, treasures, as well as currencies such as the Japanese yen, US dollar and Swiss franc. These assets are expected to retain or increase their value during marketing turbulence periods.

Although the green connection remains the world’s reserve currency of your choice, it weakens. The dollar index has fallen over 9% so far. The prognosis for Japanese yen is blurred by trade concerns. Against this background, analysts suggest that there may be an alternative to the creation: the Singapore dollar.

Christopher Wong, the FX strategist in OCBC, told CNBC that SGD is already functioning as a “Quasi Safe-Read” currency, especially within Asia and emerging markets.

“Although it does not have the same global status as traditional safe shelters as USD, JPY (Japanese yen) or CHF (Swiss Franc), SGD tends to show defensive characteristics during episodes of financial stress – especially those centered in Asia.” said Wong.

SGD is intensified by the dollar by earning about 6% year old, such as Jefferies According to messages Forecasting that the currency can reach parity with the dollar in the next five years.

“SGD is indeed one of the safe shelters in the world, but it may not be the” next secure refuge “, according to Omar Slim, co-headed on the fixed income in Asia in Pinebridge Investments.

“What makes it a safe haven is the power of the institutional framework of Singapore, the solid and sustainable economic foundations of Singapore, as well as the strong creation of policies, especially when it comes to fiscal prudence,” he said.

Felix Brill, Chief Investment Officer at VP Bank, agrees that SGD has many characteristics of modern secure refuge, including macroeconomic stability, strong institutions, a large surplus of current account and low political risk.

Brill said the Singapore Monetary Framework has provided “extraordinary stability” to the currency, which exactly is looking for Safe Haven’s flows.

Unlike most nations, Singapore does not use interest rates to manage its currency, but instead strengthens or weakens the Singapore dollar to the basket of its main trading partners in a political group. The exact currency course is not set, more recently SGD can move within the range of policy whose accurate levels have not been discovered.

Jeff NG, the head of Asia’s macro strategy at Sumitomo Mitsui Banking Corporation, estimates that the policy has a width of 4%and said that this SGD management means that there is limited variability, which gives reduced risk and more short -term security.

The first is the size of the SGD market. Data from The Bank of International Settlements in 2022 It has revealed that the USD is 88% of the Forex market, while the Jen and the Swiss franc represents 17% and 5% respectively. The Singapore dollar was only 2%. The BIS study takes place every three years, the next one is to come in September 2025.

“Although Singapore is very respected, it has a small economy, and SGD has no volume of trade or depth in the Jen or Frank’s bond market,” VP Bank’s Brill said.

In addition, the monetary policy that Singapore has has provided exceptional stability for SGD is the very thing that limits it.

Brill explains that the currency is “managed”, it limits market speculation and large -scale positioning, which in turn limits its liquidity and depth. These are key features that investors seek in a truly globally safe haven.

“So yes, the frame helps for the credibility – but it interferes with scale,” Brill said.

Other factors include Singapore export economy. The World Bank numbers indicate that exports have compiled 178.8% of the GDP of the Urban State In 2024

As such, Singapore’s monetary authority may not have an appetite for SGD to evaluate too much, according to Trin Nguyen, a senior economist at Natix Corporate & Investment Banking.

“If investors buy too many SGD assets, it will push SGD,” Nguyen said, adding that “if SGD becomes uncompetitive … MAS would not tolerate this as he sees as harmful to Singapore’s competitiveness.”

SGD can be used to mitigate currency risk. Jean Chia, Chief Investment Officer of Bank of Singapore, said SGD can play “a very important role in diversification … So this can be the third currency in many of your discussions on currency diversification.”

Experts agreed that Singapore’s currency has the potential to gradually gain a status equivalent to that of the Swiss franc, if not the yen or the green.

VP Bank’s Brill said that Safe Haven’s status was built for decades of crisis behavior and while SGD performed well during Asian downturns, it was not yet the first port during global delay.

“Over time, more international use, more accessible local markets and constant stability can gradually change this,” Brill said.

Pinebridge’s Slim is also an optimist for the future of SGD at a time when the attractiveness of traditional secure shelters has achieved a hit: “The world is increasingly seeking safe shelters and I would expect SGD to be more and more like this may not be what they were traditionally.

Jen-ai Chua, a research analyzer for Asia in Julius Baer, sounded more optimistic, saying that it did not exclude the possibility of SGD developing from Asian safe shelter to become global, but it could take time.