Singaporeans’ love for travelling is a well-known fact. Just one look on Instagram and you will see how many of your fellow Singaporeans are travelling to exotic places, looking like they are having the time of their lives.

Are you still waiting for your chance to travel? 2018 may just be the right time for a vacation as the Singapore dollar is expected to stay up for the year.

Following the recovery in the global economy, Singapore’s economy is picking up too, closing with an an impressive 3.5 percent growth in 2017. As our economy grows faster, it is likely that the Monetary Authority of Singapore (MAS) will tighten its monetary policy in 2018.

Due to Singapore’s open economy, MAS does not conduct its policy by adjusting interest rates. Instead, it does so through managing the exchange rate of the Singapore dollar against other currencies of Singapore’s major trading partners, allowing it to float within an undisclosed band.

Since April 2016, MAS has set a “neutral” stance on the Sing dollar. In 2018, an analyst from OCBC opines that it will be an “appropriate timing” for MAS to tighten its monetary policy by allowing for a mild appreciation of the Singapore Dollar.

Singapore has always prioritized the need to maintain low inflation to allow for sustained economic growth. The need for a tightening of policy stems from the likelihood of an increase in inflation due to the domestic growth that Singapore has experienced in the past year and improvements in the labour market.

OCBC Bank’s head of treasury and strategy Selena Ling told Channel News Asia that “the window is basically open (for tightening of policy). If they expect inflation to be picking up 18 months from now, they will have to move policy now.”

Furthermore, Singapore is likely to follow the policy changes of other neighbouring countries. For example, the Bank of Korea has increased its benchmark interest rate in November 2017. This would be the first rise in interest rate in Korea since 2011. Malaysia is also expected to increase their interest rates according to ANZ’s strategist.

Hence, with a need to combat potential rising inflation and to match up with the changes in policies of other countries, MAS is likely to allow the Singapore dollar to appreciate slightly. As such, 2018 should be a good year for the Singapore dollar and will be exceptionally beneficial for travellers.

One of the best destination to travel to will be the United States as the Singapore dollar has recently risen to its highest against the US dollar in recent days, standing at $1.33 per US$1. This is a significant 7.6 percent decrease from the peak of $1.44 per US$1 in December 2016. Singaporeans are also free to travel to the United States without the need for a Visa under the Visa Waiver Program which makes things a whole lot easier.

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