In Singapore, foreign currency worth record US$19.2 billion deposited in April, due to Covid-19, HK protests and trade war

Since 2015, the value of foreign currency deposits hovered between US$5 billion and US$6.5 billion before rising sharply last July and then consistently increasing

Currency fluctuations in emerging markets, such as Indonesia and China, may also have triggered some capital flight to Singapore

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Singapore is generally regarded as a safe haven for investors in Asia, and is therefore an attractive hub for foreign currencies. Photo: Reuters

Published: 3:43pm, 4 Jun 2020Updated: 7:38pm, 4 Jun 2020

With the coronavirus pandemic causing financial markets to tank and a prolonged period of uncertainty ahead, investors have been flocking to keep their cash in Singapore, with bank deposits in foreign currencies reaching an all-time high of S$26.9 billion (US$19.2 billion) in April.

In fact, such deposits have been steadily increasing since July, last year, data from the Monetary Authority of Singapore shows.

Analysts said the ongoing political crisis in Hong Kong, which started as a series of protests in June last year, the trade war between the United States and China and uncertainties over the Covid-19 pandemic have led investors to direct their funds here.

Since 2015, the value of foreign currency bank deposits had been hovering between S$7 billion and S$9 billion (US$5 billion and US$6.5 billion) but in July last year this amount rose to S$11.1 billion, a jump of more than S$3 billion, or 43 per cent, from the month before.

Since then, the amount has gradually increased every month, passing the S$20 billion mark in January to hit S$21.6 billion, before reaching April’s all-time high.

Tania Gold, the senior director of banks at Fitch Ratings Asia-Pacific, said the deposit inflows likely started ratcheting up in July last year because of the upheaval in Hong Kong, which started as a protest against a now shelved extradition bill but has since evolved into a fight for greater autonomy from China.

“Certainly Singapore saw inflows while Hong Kong saw outflows,” she said.

Pan Jingyi, a market strategist at IG Singapore, said the protests, which continued through the second half of 2019, underpinned investors’ search for safe havens. Singapore is generally regarded as one such safe haven in Asia, given its reputation as a financial centre with strong government fundamentals, she added.

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