To The Moon

The forecast from DBS Group Research (DBS) that the Singapore dollar (SGD) could reach parity with the U.S. dollar (USD) by around 2040 — and that Singapore could “double” its GDP in that timeframe — is an interesting signal. Let me put on the hat of an investor-analyst and give you my commentary plus three key take-aways.

My commentary

From an investment viewpoint, the DBS scenario is both bold and plausible — but also should be treated with caution. On the positive side:

• Singapore has a number of structural strengths: a stable institutional/governance environment, open financial markets, a strong current account surplus and a track record of productivity gains. DBS emphasises these as the underpinnings of the SGD outlook.

• If the U.S. dollar weakens (or at least doesn’t strengthen much) over the coming 15–20 years, then a currency like the SGD with these structural advantages could indeed appreciate. DBS flags “safe-haven capital inflows” as one of the drivers.

• For long-term strategic investors, this kind of forecast points to potential opportunity: if SGD strengthens, then (for example) SGD-denominated assets become more attractive for foreign investors; likewise, diversification away from USD risk could make sense.

On the flip side:

• Reaching parity with the USD implies a significant appreciation of SGD versus current levels (assuming USD doesn’t collapse). That puts pressure on Singapore’s export competitiveness, especially given the economy’s size and open trade profile. Some commentators highlight that risk.

• Many assumptions need to hold: continued productivity gains, benign global conditions, stable inflation, favourable external environment, and Singapore retaining its edge. Any disruption (geopolitical, regional competition, domestic cost inflation) could derail the trend.

• Currency forecasts 15+ years out always carry a lot of uncertainty. The “safe haven” status is not guaranteed; global financial flows can shift rapidly.

Overall: this forecast should be taken as a strategic scenario rather than a certainty. From an investment strategy lens, it invites a reconsideration of exposure (currency, assets in Singapore, regional hubs) and risk management, but with a balanced view.

Three key take-aways for investors

• Diversification away from USD risk makes increasing sense.

If one of the drivers behind DBS’s view is a weaker USD (or a lack of USD strength) and stronger SGD, investors exposed heavily to USD (via equities, bonds, FX) might consider allocating some capital to assets denominated in SGD or tied to Singapore’s growth story. It’s not about abandoning USD but about mitigating single-currency concentration.

• Singapore could strengthen its role as a regional safe-haven/financial hub — but that does not guarantee a blanket “safe asset”.

DBS highlights Singapore’s safe-haven appeal due to institutional strength, rule of law, sound macro policy, and capital-market development.

For investors this suggests tilting toward Singapore (or Singapore-linked) assets — financial services, regional wealth management, large-cap Singapore equities, perhaps SGD-denominated bonds — but still performing standard due diligence (liquidity, corporate governance, valuation). Just because a currency has “safe-haven appeal” doesn’t mean all related assets are automatically low-risk.

• Currency movements matter – and could be a catalyst for asset reallocation.

If the SGD does appreciate materially over time, that has multiple knock-on effects:

• Imported inflation for Singapore may soften (favouring consumers).

• Export sectors may face margin/headwind pressure (so sectoral differentiation matters).

• For foreign investors: SGD-denominated returns may get a tailwind from FX.

• On the other hand, appreciating currency might slow growth in some domains, so investors should look at companies with global exposure (not just domestic).

In short: pay attention not just to the currency forecast in isolation, but to how asset classes in Singapore respond — equities, fixed income, real estate, and FX exposures.

Final thoughts

Yes — there is a credible case that Singapore could become an increasingly important safe-haven/financial hub and that the SGD could strengthen meaningfully over the next 15–20 years. But that scenario is conditional on many favourable developments. From an investor’s viewpoint I would treat this as a strategic thematic (Singapore/SGD strength) rather than an immediate trade. It suggests monitoring Singapore-linked exposure, hedging USD risk, and positioning for possible upside, while keeping risk controls in place.

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