Singapore Dollar (SGD)
The official legal currency issued by the Republic of Singapore
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What is the Singapore Dollar (SGD)?
The Singapore dollar (SGD) is the official legal currency issued by the Southeast Asian sovereign island nation, the Republic of Singapore. Its dollar denominations are commonly designated with the symbol S$ to distinguish it from other dollar currencies such as the US dollar and Canadian dollar.
Singapore dollar coins and banknotes are issued by the Monetary Authority of Singapore, which serves as both the country’s central bank and overall financial regulatory entity. All of Singapore’s issued currency – estimated at just over S$30 billion – is fully backed by gold, silver, or other assets held by the Monetary Authority.
As of 2020, the Monetary Authority owns over US$270 billion in assets. The Singapore dollar is considered one of the strongest and most stable currencies in the world.
In the foreign exchange (forex) trading market, the symbol for the Singapore dollar is SGD. For example, the exchange rate between the US dollar and the Singapore dollar is expressed as USD/SGD.
Summary
- The Singapore dollar is the official legal currency issued by the Republic of Singapore. The country’s economy has become one of the strongest in the world, making the Singapore dollar one of the most widely traded currencies.
- The country’s central bank, the Monetary Authority of Singapore, closely monitors the foreign exchange rates for the Singapore dollar.
A Brief History of Singapore and its Economy
In the early 1800s, the Republic of Singapore was first established as a trading post, and soon thereafter, a colony of the British Empire. Singapore was taken over and occupied by the Japanese Army during World War II but regained its place as a British crown colony in 1945.
It became an independent nation in 1963. Following a brief two-year period as a part of the federation of Malaysia, Singapore existed as an independent country since 1965, gradually building one of the strongest economies in the Asia-Pacific region.
The government of Singapore is guided by the country’s Constitution and consists of an executive branch that includes a President and a Prime Minister, a single legislative body – the Parliament, and an independent judiciary that is composed of the Singapore Supreme Court and state courts.
According to the World Economic Forum, Singapore’s economy is the most competitive economy in the world as of 2020. It attracts substantial foreign investment, thanks to its favorable tax rates, skilled labor talent, and an overall business-friendly environment. It is widely recognized as a major financial services center, a center for oil refining, and as a major shipping port.
Singapore’s GDP per capita rate is the second-highest in the world. Its strong international economic standing is indicated by the fact that it is regularly invited to the summit meetings of the G20 central bank governors, though it is not a member of the group.
The Singapore Dollar Currency
Singapore first began issuing its own currency in various coin and banknote denominations in 1967. The Singapore dollar was initially pegged to the British pound, then briefly to the US dollar, before becoming pegged to a trade-weighted basket of currencies in the mid-1970s.
Starting in 1985, the Singapore dollar’s been allowed to float within a range of foreign exchange rates closely monitored by the Monetary Authority of Singapore to control inflation and support the value of Singapore exports. The country’s currency is somewhat correlated with the value of China’s yuan, but not nearly as tightly regulated as the yuan.
The country’s central bank mints coins in denominations of 1 cent, 5 cents, 10 cents, 20 cents, 50 cents, and one dollar. Banknotes are currently issued in denominations of S$2, S$5, S$10, S$50, S$100, S$500 and S$1,000.
Following the money laundering concerns and financial practices of many other countries, Singapore’s central bank began withdrawing its higher denomination S$10,000 banknotes from circulation in 2014 and plans to stop the printing of the S$1000 banknotes in 2021. Paper banknotes issued are gradually being replaced by polymer banknotes.
In addition to the standard currency, the Monetary Authority of Singapore issues several limited-edition commemorative banknotes in denominations ranging from S$2 to S$50. The latest is a 2019 S$20 banknote that commemorates the bicentennial of the country’s establishment as an official trading post of the British Empire.
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