EUR / SGD is a multicurrency pair that shows the ratio of the euro to the Singapore dollar. This pair is quite exotic and is not often used by traders.
Nevertheless, it can be used to make good profit, but for this, you need to understand how the economies of the EU and Singapore work. Since they are entirely different from each other, traders will have to deal with all the subtleties.
As for the euro, the currency directly depends on the economic factors of the EU. The main one is inflation and a decline in GDP. The European Central Bank regularly monitors these indicators, and once every six weeks decides on the current trading rate.
If the economy is weakening, the ECB will lower the rate to stimulate the economy, while the currency strengthens, prices rise. This is the essential point that traders need to know about the euro.
Singapore Dollar (SGD) – The currency of the state of Singapore. The country has an extremely developed economy, which does not depend too much on any shocks and market fluctuations. This makes the Singapore dollar a valuable and risk-free asset.
Initially, the prosperity of Singapore was ensured through trade with its immediate neighbors. After gaining independence in 1965, the country developed the primary electrical industry and a new sector of the economy appeared – oil refining.
During the 1960s, these two sectors developed rapidly. There was a significant expansion of oil refining, and in 1967, Texas Instruments, attracted by tax incentives, opened a semiconductor plant.
Other electronic companies soon followed, and Singapore quickly became a global player in the electronics industry. Subsequently, pharmacology developed, then financial services and tourism, which in general significantly stimulated the economy.
Singapore has a high level of government intervention, a stable currency, relatively low inflation, and long experience of prudent macroeconomic management and outstanding growth. GDP grew by 6.7 percent per year for 1980–90 and 7.6% per year for 1990–2000.
Significant domestic investment stimulated rapid economic development, and foreign investment increased in the 1990s. Since the late 1990s, the policy has been pursued to expand innovative, research aspects in the field of electronics, biotechnology, and other high-tech sectors.
After the Asian economic crisis, investments and exports (but also imports) were depressed, and growth fell sharply from 8.6 percent in 1997 to -0.9 percent in 1998, recovery took place in 1999-2000.
The stock market was liberalized, and banking restrictions were eased to provide greater competition from foreign institutions.
But in 2001, the country’s economy plunged into recession – down 2.3 percent – as a result of the international downturn in information technology.
Since this period, Singapore’s GDP has been growing, although not as fast as before, but steadily. Even during the crisis of 2008-2009, the country showed economic growth.
Both currencies that make up the quote are subject to the strong influence of the US dollar, and therefore, for the correct analysis of the EUR/SGD pair, you should pay attention to the primary macroeconomic data of the United States, including the refinancing rate, GDP, labor market data and inflation.
At the same time, both the euro and the Singapore dollar react differently to the publication of fundamental US data. Singapore’s highly developed economy is focused on the export of household appliances, medical devices, information technology, and shipbuilding.
The country’s exports affect the exchange rate of the national currency. Singapore dollar today is one of the most stable currencies in the world. The EUR/SGD pair has less liquidity compared to the main trading instruments EUR/USD, GBP/USD, USD/CHF.
Slight fluctuations characterize the graph of the euro against the Singapore dollar. In this regard, it is believed that it is more profitable to trade EUR/SGD using medium-term strategies.
In general, to clearly understand how the EUR / SGD cross behaves, you need to monitor what demand is for high-tech industries and products. With the active development of high technology, the Singapore dollar reaches a peak of stability. The euro looks less confident against this background.