The Singapore dollar (SGD) is the official currency of Singapore, issued and controlled by the Monetary Authority of the country. The following coins are currently in circulation: 1, 5,10,20,50 and 1 dollar.
Singapore is well known for its favorable business environment with significant flows of direct and indirect investments, due to sustained government in the area famous for its chaos. The country is also the largest transporting and trading center and possesses a significant stock exchange with many 750 companies with assets value of 900 billion SGD.
For now, Singapore continues to be the unique country in the global economy, which applies the monetary policy system primarily based on exchange rates.
In simple words, the central bank permits the SGD to boost and decline, participating in the process only when it’s necessary to keep up with in a specific target level, that is not revealed to the public.
The complex of a robust, stable economy and the monetary policy based only on the exchange rate proves that the Australian and Singapore dollars can be a relatively profitable pair in the short and medium-term.
In the meantime, the Australian dollar is strongly influenced by the commodity exchange market, cost of gold, and other natural minerals. Australia is one of the countries, which decided to switch for plastic money- durable and much more resistant material. Moreover, banks and stores accept a ripped Australian dollar, as two separated bills, as the half value of the whole.
Another interesting fact is that roughly 12% of the value of AUD is based on agriculture and its processes. In the case of aridity or laws changes related to animals and their transportation abroad, the Australian dollar will immediately dropdown.
Traders would say that AUD/SGD is an unfamiliar and not attractive pair. It happens because of reduced trade turnover between the two countries, as well as the lack of analysis of actual trends.
Another reason could be the matter of the fact that the Australian government does not participate in manipulating the currency. At the same time state in Singapore is involved in fluctuations of exchange rates.
Geographically, Singapore is a small country and is entirely dependent on international trade. Even taking into account that is the most tightly populated in the world, the share of the domestic trade is low. Thus, the state secures against fluctuation in external circumstances and gives a chance to develop and prosper the industry.
The country is mainly concentrated on the export of electronics and chemicals and imports resources and raw material. According to the statistics, the unemployment rate is low, but labor is still scarce, and foreign workers successfully solve it.
When you make a profound analysis of significant industries of both countries, they both have advantages, but in this case, Singapore gets ahead. Notwithstanding, when you trade on exchange rates, it is essential to consider the economy changes first.
Summing up all the information presented above, it becomes evident why traders avoid the pair – with the rising demand for raw materials, the Singapore economy lifts as well if the Australian dollar becomes more potent than traders eliminate existing of the trading corridor.
In the meantime, Singapore relies on the shipping conditions and is dependent on the economic and political situation in the Southeast. The examination of the annual data shows that the pair performed a quite sharp range of fluctuations over the past ten years. To reach the top from the bottom usually needs up to 3 months for the couple. Thus, it can be considered as a long-term instrument.