To The Moon

$DBS(D05.SI)$

In one of the boldest macroeconomic projections to come out of Southeast Asia in years, DBS Group Research has released a long-term report that envisions a radically stronger Singapore — one where GDP doubles by 2040, the Straits Times Index (STI) soars to 10,000 points, and the Singapore dollar (SGD) achieves parity with the US dollar (USD).

That last prediction, in particular, has grabbed global headlines. For decades, the USD has reigned as the undisputed reserve currency of the world, while the SGD — though respected for its stability — has remained in a completely different tier of global influence. But DBS is arguing that by 2040, Singapore’s rise and America’s gradual fiscal decline could bring the two currencies to equal strength.

The forecast isn’t just about exchange rates. It’s a statement on shifting global power — economically, monetarily, and geopolitically. If DBS’ thesis holds true, it suggests a future where Singapore emerges not just as a thriving financial hub, but as Asia’s premier “safe haven”, rivaling Switzerland in both credibility and capital inflows.

So, can the SGD really reach USD parity by 2040? What would that mean for investors? And if the US dollar enters a multi-decade downtrend, how should long-term investors prepare their portfolios?

The Bold Call: DBS’ 2040 Vision for Singapore

DBS’ projection rests on a long-term view of Singapore’s economic transformation, arguing that its compact, disciplined model of governance and finance will continue to outperform in an increasingly volatile world.

A Doubling Economy

According to DBS, Singapore’s GDP could double by 2040, supported by growth in high-value sectors such as advanced manufacturing, financial technology, artificial intelligence, and green infrastructure. The nation’s robust intellectual property protection and consistent policy environment make it an ideal location for multinational corporations and family offices.

Singapore’s economic expansion is also being driven by regional tailwinds. As ASEAN becomes a key growth driver for global trade — expected to be the world’s fourth-largest economic bloc by 2030 — Singapore stands at the heart of it, serving as the region’s financial and logistical nerve center.

STI 10,000: A Milestone of Maturity

The Straits Times Index, which currently trades around 3,200 points, could surge to 10,000 points by 2040 if corporate earnings compound at roughly 6–7% per year. This growth trajectory assumes steady profitability from banks, REITs, and technology-linked industries, along with rising investor participation and international capital inflows.

The underlying message? Singapore’s markets may finally decouple from their reputation for stagnation and begin to reflect the strength of the underlying economy.

Why DBS Thinks the SGD Can Reach USD Parity

The most attention-grabbing part of DBS’ report is its SGD/USD parity forecast. It’s not simply a speculative statement — it’s based on Singapore’s structural monetary design and long-term macroeconomic trajectory.

The MAS Advantage

Unlike the US Federal Reserve, the Monetary Authority of Singapore (MAS) does not set interest rates. Instead, it manages the exchange rate through a trade-weighted basket of currencies, gradually allowing the SGD to appreciate over time to maintain price stability and purchasing power.

This mechanism has made the SGD one of the most consistent appreciating currencies globally. Since 1980, it has strengthened from SGD 2.30 per USD to about SGD 1.35 per USD today — a nearly 70% gain in purchasing power over 45 years.

DBS argues that, given Singapore’s rising productivity, persistent trade surpluses, and foreign capital inflows, the same trend could continue — potentially bringing the SGD to SGD 1.00 = USD 1.00 within 15 years.

Key Drivers of Long-Term Appreciation

1. Structural Current Account Surpluses: Singapore runs one of the highest current account surpluses globally (around 15–20% of GDP), fueled by strong exports of services, electronics, and capital goods.

2. High Foreign Reserves: MAS’ foreign reserves now exceed US$400 billion, giving it deep capacity to defend the currency in any shock scenario.

3. Rising Global Investment Inflows: Singapore has become a magnet for foreign wealth — from Western pension funds to Chinese billionaires — seeking stability amid global fragmentation.

4. A Weakening USD Over Time: The US faces long-term structural challenges — twin deficits, rising debt-to-GDP (now above 120%), and declining real interest rate advantage — that may weigh on the dollar’s dominance.

When you combine these dynamics, DBS’ parity call starts to look less outrageous and more like a natural extension of long-term economic gravity.

The Counterargument: Limits to How Strong SGD Can Get

However, even the most bullish observers acknowledge that SGD parity may represent an upper bound rather than an inevitability.

Export Competitiveness Constraints

A too-strong Singapore dollar can undermine export competitiveness, especially for sectors like manufacturing, logistics, and tourism. The MAS — whose mandate includes preserving external competitiveness — would likely intervene to slow appreciation if it began to choke off trade-driven growth.

Regional and Global Headwinds

While Singapore has immense strengths, it remains highly open and externally oriented. A prolonged global recession, sharp drop in regional trade, or major geopolitical conflict could slow the appreciation trajectory. In such cases, MAS could even flatten or lower the slope of its appreciation path to maintain stability.

The Reserve Currency Barrier

Reaching parity with the USD symbolically challenges the dominance of the world’s reserve currency — a role the SGD, despite its credibility, is unlikely to replace. The USD’s unparalleled liquidity, treasury market depth, and global network effects mean it will retain reserve status, even if it weakens structurally.

Thus, while DBS’ parity forecast is theoretically plausible, many economists see it more as a directional call — that the SGD will continue strengthening, perhaps reaching SGD 1.10–1.15 per USD by the late 2030s, but not necessarily full parity.

Singapore’s “Safe Haven” Evolution

Over the past two decades, Singapore has quietly built itself into a financial fortress. Its balance sheet strength, governance quality, and political neutrality make it the “Switzerland of Asia.”

Financial Credibility and Institutional Strength

• AAA Credit Rating: One of only a handful of countries globally to maintain top-tier ratings from Moody’s, S&P, and Fitch.

• Low Inflation, Low Debt: Fiscal discipline remains a hallmark — government debt stands at roughly 40% of GDP, and most of it is backed by assets.

• Monetary Stability: MAS’ exchange-rate policy has delivered remarkably low volatility compared to other emerging and developed currencies.

The Wealth Magnet

Singapore’s wealth management industry has exploded — with assets under management exceeding US$5 trillion in 2025, up nearly 150% from a decade ago. The country now ranks as the third-largest wealth hub in the world, behind only the US and Switzerland.

Family offices have quadrupled since 2020, with a sharp rise in ultra-high-net-worth individuals relocating capital to Singapore for tax efficiency, asset security, and geopolitical neutrality.

A Rising “Safe Haven” Identity

As global tensions rise — from US-China rivalry to Middle East instability — Singapore’s brand of orderly capitalism and apolitical diplomacy has become increasingly attractive. Its legal framework, English-based judiciary, and transparent tax system make it an ideal base for global investors looking for long-term stability.

If the SGD continues to strengthen alongside these factors, it’s plausible that Singapore becomes the new anchor of financial confidence in Asia — a regional safe haven for capital preservation and compounding.

What If the USD Keeps Sliding?

The USD has held global supremacy for decades, but cracks are showing. The US fiscal deficit now exceeds US$2 trillion, while political gridlock continues to erode global confidence in its long-term solvency. Meanwhile, the rise of BRICS+ alliances and the growth of alternative payment systems are slowly chipping away at the dollar’s monopoly.

If this structural decline continues, global portfolios will inevitably rebalance toward hard assets, alternative stores of value, and non-USD currencies.

Gold’s Timeless Role

Central banks have been net buyers of gold for over 15 consecutive years, and 2025 marked one of the largest annual purchases on record. A sliding USD almost always corresponds with a rising gold price, as investors seek a hedge against fiat depreciation.

Gold also carries no counterparty risk — making it a natural complement to strong currencies like the SGD.

The Rise of Regional Currencies

As Asia’s share of global GDP expands, more trade will be settled in local currencies, boosting the relevance of the SGD, CNY, and JPY. Singapore’s credibility as a regional hub could see the SGD become a preferred settlement and reserve currency for ASEAN-based trade and financial flows.

Real Assets and Dividend Stocks

A long-term USD decline typically benefits real assets — property, infrastructure, and commodities — as investors hedge inflation and seek tangible value. Similarly, global blue-chip dividend stocks with geographically diversified revenues can offer natural currency hedging.

How to Position for a Long-Term USD Downtrend

A prudent investor should treat DBS’ forecast not as a speculative trade, but as a strategic signal for portfolio construction in a changing monetary world.

Here’s one possible allocation framework:

• 20–25% in Gold & Precious Metals: A hedge against fiat currency debasement and rising inflation expectations.

• 15–20% in Asian Equities & REITs: Especially Singapore, India, and Indonesia — beneficiaries of regional capital flows and currency appreciation.

• 30–35% in Global Blue-Chip Equities: Focus on companies with strong pricing power and multi-currency earnings exposure.

• 10–15% in Bonds or T-bills: Balanced across USD, EUR, and SGD to provide yield stability.

• 5–10% in Alternatives: Private equity, digital assets, or infrastructure funds to capture uncorrelated returns.

The guiding principle: hedge the dollar, not abandon it. The USD will remain dominant, but its purchasing power and geopolitical leverage are likely to erode gradually — a process that savvy investors can prepare for.

The Bigger Picture: Monetary Rebalancing and Singapore’s Ascent

The world may be entering a new currency equilibrium — one where monetary power is more distributed, trade flows are more regional, and fiscal credibility is more valuable than ever.

Singapore’s strengths — fiscal prudence, political neutrality, and rule of law — position it as a winner in that multipolar future. Whether or not the SGD reaches parity with the USD by 2040, the direction of travel is clear: Singapore’s currency, economy, and capital markets are all ascending.

In an age of debt-laden economies, volatile politics, and eroding trust in central banks, Singapore’s model of quiet stability may prove to be the ultimate competitive advantage.

Investor Takeaways

• SGD parity with USD is plausible — but even without it, SGD strength is a long-term trend.

• Gold and Asian assets remain key hedges against a declining dollar environment.

• Singapore’s rise as a safe haven could redefine Asia’s investment landscape through 2040. Portfolio positioning matters more than prediction — diversification across currencies and real assets will be essential.