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Singapore Dollar long term foreign currency investment; new ETF

Guggenheim issues SingDollar ETF: attractive long term foreign currency investment

The Singapore Dollar is something that Singaporeans take for granted. To foreign investors however, the currency is a very attractive foreign currency investment to hold for the long term. Its performance against the US Dollar over the past ten years proves that the Singapore government is a sound manager and custodian. Its appreciation at a time when other major currencies are racing to the bottom provides good protection to investors who are mindful of rising inflation. By appreciating against the US Dollar, the Singapore Dollar is protecting its purchasing power.

 

CurrencyShares Singapore Dollar Trust launched in February

Guggenheim Investments, a global financial services firm issued CurrencyShares Singapore Dollar Trust (Symbol FXSG) on 13 February 2013. It is an exchange traded fund or ETF that tracks the SGD/USD exchange rate. The ETF will be traded on the NYSE Arca.

 

Long term foreign currency investment

In a previous blog 'Why should individuals invest in foreign currency?' we said that the Singapore Dollar is a very sexy currency compared to the US Dollar.

Based on the 2001 exchange rate of 1.85 nine years ago, it took 54 US cents for a US citizen to buy 1 Singapore Dollar (an investment in a foreign currency to him). Nine years later, this savvy investor would receive 83 US cents (his native currency) when he sold his 1 Singapore Dollar. That is an amazingly sexy long term capital appreciation of 29 cents or 54% gain.

US Dollar to Singapore Dollar chart

This is a chart of the USD/SGD exchange rate; the chart of FXSG is inverted

To an investor, this is an outstanding performance and is comparable to the decade long bull run that Gold has done.

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