What Is the SGD (Singapore Dollar)?
SGD is the currency code for the currency of Singapore, the Singapore dollar. This code is used in the currency market, also known as the foreign exchange market, which is the largest financial market in the world and has a daily average volume of over US$5 trillion.
The Singapore dollar, which is symbolized with S$, is made up of 100 cents. Denominations of the Singapore dollar include banknotes of two, five, 10, 20, 50, 100, 1,000, and 10,000, as well as coins of 5, 10, 20, and 50 cents as well as S$1 coins.
- SGD is the currency code for the currency of Singapore, the Singapore dollar.
- The currency floats against other major currencies, but it can be exchanged at par with the Brunei dollar.
- The SGD is actively traded in the foreign exchange market, ranking 13th in terms of trade volume as of 2019.
Understanding SGD (Singapore Dollar)
The Singapore dollar first circulated in 1967. Before that, Singapore used the Straits dollar, the Malayan dollar, and the Malaya and British Borneo dollar, in that order.
In 1967, the Singapore government pegged the currency to the British pound (GBP) at 8.57 SGD to one GBP. In the 1970s, the Singapore dollar was briefly tied to the U.S. dollar (USD). Then, between 1973 and 1985, it was pegged to a hidden basket of foreign currencies. Since then, the Monetary Authority of Singapore (MAS) has allowed the Singapore dollar to float.
The Singapore dollar is a highly traded global currency, ranking 13th among currencies as of 2019.
Between 2015 and 2018, gross domestic product (GDP) grew at 2.9%, 3%, 3.7%, and 3.1%, respectively. Inflation over the same period was 3.2%, 0.8%, 2.6%, and 1.9%.
Singapore is highly dependent on exports, including electronics, pharmaceuticals, chemicals, and petroleum products. Additionally, Singapore has a robust financial sector and stable real estate prices, which attracts offshore investors.
History of the Singapore Dollar
In 1926, Singapore became part of the Straits Settlements alongside Malacca and Penang. Initially, the Straits Settlements used the Straits dollar as their currency. The Malayan dollar replaced the Straits dollar in 1939, and the Malayan dollar later became the Malaya and British Borneo dollar.
In 1946, after the Straits Settlements were dissolved, Singapore became a British colony. A few decades later, in 1963, Singapore became part of Malaysia, and in 1965, the city-state left Malaysia to become an independent nation.
A few years later, in 1967, the nation-state established the Singapore dollar after the breakdown of the monetary union between Malaysia and Brunei. The three currencies were exchanged at par until 1973, when Malaysia left this agreement. To this day, the Singapore dollar remains interchangeable with the Brunei dollar.
Example of Converting Singapore Dollars (SGD) to Other Currencies
The SGD will fluctuate against global currencies. Assume that the USD/SGD rate is 1.37; this means it costs S$1.37 to buy one US$1.
If the rate were to increase to 1.4, then the SGD would be falling in value relative to USD, since it now costs more SDG to buy one USD. If the rate were to fall to 1.33, then it would cost fewer SGD dollars to buy one USD, so the SGD would be increasing in value relative to the USD.
To find out how many U.S. dollars it takes to buy one SGD, divide one by the USD/SGD rate. In this case: 1/1.37 = 0.73. That means US$0.73 will buy a single SGD. This is the SGD/USD rate (notice the codes are flipped).