DBS has sent a shockwave through the macro world with a headline that the Singapore dollar (SGD) may be trading at one-to-one with the U.S. dollar (USD) by 2040. This prediction is part of a larger story that Singapore's GDP might more than double to between US$1.2–1.4 trillion over the next 15 years, with the Straits Times Index possibly going up to 10,000. The bank bases its opinion on productivity improvements, continuous current account surpluses, and stable capital inflows.
That brings up two questions that investors are interested in:
Is one-to-one really possible in a world where the USD remains the dominant reserve currency?
Is Singapore turning into Asia’s next “safe-haven” hub?”
Reasons for DBS to Predict Parity
Macro engine: DBS sees around 2.3% yearly real GDP growth through 2040, which is slower than most advanced peers, and is mainly fetched by high-value services, resilient manufacturing, and steady capital accumulation. Larger, richer economies generally become the source of stronger currencies over time, especially when these are backed by external surpluses.
External surpluses: For a long time, Singapore has maintained a structurally positive current account. The most recent official data indicate a current-account surplus of about 17% of GDP in 2024, which acts as a cushion supporting the currency through different phases of the economic cycle.
Policy credibility: Singapore is among the world leaders in terms of macro framework orthodoxy. The Monetary Authority of Singapore (MAS) manages inflation through the exchange rate by using the S$NEER (a trade-weighted basket), adjusting the slope, width, and center of the band; it is not a direct SGD/USD rate that is targeted, but the structure has been successful in delivering low and stable inflation over time, which is a prerequisite for a sustained currency appreciation.
By maintaining a strong balance sheet and high reserves, Singapore is comfortably positioned to face the future. Official Foreign Reserves are approximately S$500+ billion, which is only a part of a larger national balance sheet (including GIC and Temasek) that is capable of providing not only financial stability but also policy flexibility, that is to say, the thing that long-horizon FX investors go crazy for.
The “safe-haven hub” argument: not just a matter of branding
AAA across the board: Singapore is still enjoying a triple-A/Aaa rating perspective from the best three agencies, and there is a long bright road ahead. This means the strongest institutions, most predictable policies, and the least political risk are the main features of the country.
Capital magnet: And the influx is coming from family offices and global wealth. By the end of 2024, there were approximately 2,000 single-family offices in Singapore, as compared to ~1,650, with the asset-management industry having over S$6 trillion AUM - most of which is coming from foreign sources. This is typical behavior for a safe-haven: capital is attracted by depth, rule of law, and tax clarity.
Crisis-ready policy: MAS can bring the exchange-rate regime back to normal very quickly in case of shocks. In 2025, when inflation was getting lower and growth was slowing down, MAS decided to ease the slope (after the tightening cycle that followed the post-pandemic period), and then they continued with the same policy later in the year - this is an example of being data-driven and agile, which is what investor trust is built upon.
More than enough backstops: Big reserves (including the tool that allows for the transfer of extra FX reserves to the government through Reserves Management Government Securities (RMGS)) give the country a few more shock absorbers in case of liquidity events. The IMF’s 2025 Article IV points to Singapore’s large official liquid assets as the main factor that alleviates financial-sector liquidity risks.
Not so fast: things that could prevent parity
The MAS is nowhere near targeting a one-to-one USD parity. The SGD is controlled concerning a basket, not the dollar. Even if the NEER is strong, the bilateral SGD/USD will always indicate at what position in the global cycle the USD is. Hence if US growth, yields or safe-haven demand stay strong, USD broad strength could be the reason why we don't get parity even though Singapore's fundamentals are stellar.
Nevertheless, the United States remains the benchmark haven
In spite of its fiscal noise, the U.S. is still the most favoured reserve-currency with the deepest markets. Also, its sovereign rating (AA+/Aaa/AA+) is still among the very best. The standard for the next currency to be at par with the USD bilaterally is high and fluctuating with the cycle.
Ageing and costs
As Singapore moves up the value chain, demographics and living costs become factors that require productivity to keep up. In the event that unit labor costs become higher than the gains, the case for continuous real appreciation will be weakened - however, up to now, the policy has been strongly inclined towards upskilling and capital deepening (DBS's growth pillars)..
Regional spillovers
The city-state is at the epicenter of Asia's capital market - a good thing for risk-on periods and a bit complicated for stress ones when there are cross-border deposit flows which might be volatile. Nevertheless, the large liquid assets and tight supervision of the system are two major factors that alleviate the problem.
Investment takeaways
Base case: A progressively stronger Singapore dollar in terms of real effective exchange rate is achievable if Singapore can still hold on to its productivity growth, external surpluses, and policy credibility. Parity by the year 2040 is an optimistic scenario, not a target of the central bank.
Portfolio angle: For international investors, Singapore's triple-A rating, inflexible rule of law, maturing wealth ecosystem, and substantial reserves are the main arguments for the "safe-haven hub" story in Asia. It is especially true for wealth management, cash management, and regional H.Q. functions.
Risk management: Pay attention to the U.S. dollar cycle, MAS policy statements, and current-account reports. A durable shift towards lower U.S. real rates and a softer USD would greatly benefit the SGD; the opposite would make parity wait.
Bottom line
It's a long shot that DBS's parity move is bold—but not a fantasy. If Singapore manages to grow real at ~2–3%, keeps the surplus machine running, and behaves policy-wise, the SGD will be able to keep appreciating gradually over the long term. The question of whether it will reach 1.00 by 2040 will depend very little on Singapore and a lot more on where the USD will be in its own secular cycle. Notwithstanding parity, Singapore is mounting a considerable challenge to become the safe-haven hub of the region: AAA ratings, substantial reserves, net external surpluses, and a growing wealth management base. For investors, this is a combination that deserves their attention.
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