In recent years, the Singapore dollar (SGD) has experienced a decline in its value against major currencies such as the US dollar, euro, and British pound. There are several reasons why the SGD has been falling, including external factors such as global economic conditions and domestic issues such as inflation and monetary policy.
One of the primary reasons why the SGD has been falling is the global economic slowdown. Many countries around the world, including Singapore, have been affected by the COVID-19 pandemic. This has led to a decrease in demand for Singaporean goods and services, which has had a negative impact on the country’s economy. As a result, investors have been less willing to hold SGD, which has caused its value to decline.
Another factor contributing to the SGD’s decline is inflation. Inflation refers to the increase in the price of goods and services over time. As inflation rises, the purchasing power of a currency decreases, which can cause its value to fall. In Singapore, inflation has been increasing due to rising food and housing costs, as well as higher import prices. This has put pressure on the SGD and caused its value to decline.
Monetary policy is also a contributing factor to the SGD’s decline. The Monetary Authority of Singapore (MAS) is responsible for setting monetary policy in the country. In recent years, the MAS has pursued a policy of gradual appreciation for the SGD. However, this policy has become more difficult to maintain due to the global economic slowdown and rising inflation. As a result, the MAS has been forced to loosen its monetary policy, which has caused the SGD to decline.
Finally, another external factor that has contributed to the SGD’s decline is the strengthening of other major currencies. For example, the US dollar has been rising in value due to a strengthening US economy and higher interest rates. This has made the SGD less attractive to investors, who have been more interested in holding US dollars
