Major headlines in August revealed the many upsides of the Singaporean dollar over the last few months. The SGD had reportedly extended its gains to attain an 18-month high, gaining significantly over the dollars as of August. The SGD began rallying in August and became the third-best performer in Asian countries, closely following the Malaysian ringgit and the Hong Kong dollar. Singapore has been a significant financial hub for years and consistently ranks amongst the biggest economies globally. Its foreign exchange market is also booming, leading 3rd after London and New York. With the recent boost in SGD performance, currency economic positioning, and recent MAS policies, this year could be the best time to invest in the country’s foreign exchange sector.
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Singapore’s Current Economic and Market Conditions
Singapore’s economy grew by 2.7% year-on-year in the first quarter of 2024, the highest performance the country has seen in the past one-and-a-half years. This data was revealed alongside government expectations for the manufacturing and trade-related sectors for the rest of 2024.
Further data from the Ministry of Trade and Industry (MTI) in Singapore revealed that the country’s GDP increased by 2.9% in the second quarter of 2024, in addition to the prevailing increases in the year’s first quarter.
According to World Economics, the country’s GDP as of 2023 was estimated to be $814 billion, following the accumulated performances in the global market. Singapore has always been a large economy, making it a strategic location as an international financial hub attracted to investors and forex traders.
Why Is It a Good Time To Trade Forex in Singapore?
The Singaporean dollar is currently one of the best performers in Asia, trading strongly against giants like the U.S. dollar. The Monetary Authority of Singapore (MAS) has strong but stable regulatory frameworks that could benefit traders in several ways. Lastly, there is a huge brokerage network open to forex traders in Singapore.
Strong Currency Performance
The SGD increased as much as 0.1% to 1.3163 per USD in August, recording its highest gains since September 2023. Since then, the currency has been stable, leading closely alongside the Malaysian ringgit and the Hong Kong dollar. This performance directly responded to MAS’s decision to keep a tighter policy instead of the Federal Reserve in 2024.
While the Federal Reserve has indicated possible attempts to cut interest rates in 2024, MAS’s tighter policies dictate that this step might not be taken until 2025.
The next Federal Open Market Committee will be held on September 18, 2024. This is a crucial date for investors and market analysts, as it could change the narrative for the U.S. dollar’s performance in the coming months. As bets increase that the feds will likely cut rates this year, people are moving to sell the U.S. dollar.
Stable Regulatory Framework
Another major selling point for the forex trading market in Singapore is the strict rules and framework set by MAS. The monetary authority of Singapore is responsible for all rules and regulations for retail and institutional trades in the country, and it has core regulations that protect investors and brokers.
Some of the laws this body enforces are compulsory Capital Markets Services (CMS) licenses for all brokers and timely reports to ensure transparency. MAS’s strict approaches have been highly beneficial for investors because they help them avoid fraudulent brokers. Trading in such an environment helps protect your funds and transact in a safer financial market.
In addition, the country’s tax system for forex traders has one of the lowest rates. The corporate tax rate is 17%. Tax liability depends on the frequency and volume of your trades. Income range taxes could be from 0% to 22% for investors earning up to $20,000 to $320,000, respectively.
Favorable Technological and Brokerage Considerations
Trading instruments in Singapore are also an added advantage. This is major because the country allows some advanced trading platforms and tools for its citizens. Since foreign exchange is 100% legal here, investors are permitted to access tools and platforms that can be used to further this cause.
Brokerage systems are also operational and in place to ease the entire trading process. Oanda is one of the best brokerage platforms operating in the country, and several advanced trading instruments are available.
Kickstarting Your Forex Journey in Singapore
The first step to a steady career in this industry is learning how it works. If you do not already know that, taking courses and learning how forex trading works is best. Next, you can practice your skills through demo trading. Most brokers and online trading applications provide a demo trading mode that can help investors perfect their skills. Lastly, be sure to work with a verified and licensed brokerage platform. You can visit the MAS official website to know if your broker is authorized to operate in Singapore.