SINGAPORE — Prime Minister Lawrence Wong has firmly rejected proposals to devalue the Singapore dollar as a means to enhance the city-state’s global competitiveness, asserting instead that the nation must leverage its robust economic fundamentals.
Speaking at the DBS Asia Future Forward Conference on Monday, Wong responded to remarks by DBS CEO Tan Su Shan regarding Singapore’s status as a financial safe haven. Tan noted that while this reputation attracts capital and supports the local currency, it also contributes to the high cost of doing business in the region.
“You’re surely not suggesting that we depress our exchange rate in order to be more competitive,” Wong said during the exchange.
The Prime Minister emphasized that the Monetary Authority of Singapore (MAS) operates independently and manages monetary policy through exchange rates rather than interest rates, which are used by most other major central banks. The MAS benchmarks the Singapore dollar against a undisclosed basket of currencies from its key trading partners.
“The Singapore dollar will reflect our economic fundamentals, and if the economy does well, then we can continue to expect a strong, stable Sing dollar that is anchored on fundamentals and will also help keep imported inflation down,” Wong explained. He highlighted that a stronger currency acts as a buffer against rising import costs, a critical factor for a nation heavily reliant on international trade.
Since the beginning of the year, the Singapore dollar has appreciated by approximately 0.4% against the U.S. dollar. Wong acknowledged the challenges this poses for exporters, who must compete in a market where Singapore is not the cheapest location in Southeast Asia.
However, he argued that competing solely on price is an unsustainable strategy. “Companies are not looking for the cheapest locations,” Wong stated. “They are looking for capabilities. They are looking for stability. They are looking for predictability.”
Wong outlined that Singapore is focused on building broader industrial ecosystems that connect multinational corporations with local suppliers, research institutions, and a skilled workforce. The government’s approach centers on offering high-value opportunities rather than low costs.
“We have to again play to our strengths and compete on the basis of the value we bring to the table,” he concluded.
But what about small exporters struggling with the stronger dollar? Their margins are getting squeezed hard right now.
Smart move. Competing on value and stability beats a race to the bottom any day.