Singapore dollar rises amid renewed U.S. tariff threats
The Singapore dollar gains ground against the U.S. dollar, driven by growing momentum in the so-called “sell America” trend triggered by renewed tariff threats.
A dramatic surge in Asian currencies is signaling a shift in global financial flows, with analysts warning of a potential erosion of long-standing U.S. dollar supremacy.
The Taiwan dollar’s record-breaking rally on Friday and Monday has triggered a broader appreciation across the region, driving up the Singapore dollar, Chinese yuan, South Korean won, Malaysian ringgit, Thai baht, and the Hong Kong dollar.
The sharp moves are being interpreted by investors as the early signs of a structural change in currency dynamics, likened to an “Asian crisis in reverse.” Unlike the capital flight of the 1997–98 financial crisis, money is now flowing into Asia and out of U.S. dollar assets.
“This has a very sort of Asian-crisis-in-reverse feel to it,” said Louis-Vincent Gave, founding partner of Gavekal Research, noting the rapid pace and scale of the shift.
For decades, Asian economies — particularly China, Taiwan, South Korea, and Singapore — accumulated U.S. dollar reserves from trade surpluses and recycled them into U.S. Treasuries. That pattern appears to be breaking, driven in part by investor concerns about the trajectory of U.S. monetary policy, economic stability, and President Donald Trump’s tariff escalation, which has altered the calculus for exporters.
Trump’s April 2 announcement of sweeping new tariffs, dubbed “Liberation Day,” has cast a shadow over U.S. asset returns and weakened confidence in the dollar. Some in the markets have even speculated about an informal “Mar-a-Lago agreement”—a coordinated move to weaken the dollar—though Taiwan’s Office of Trade Negotiations has denied any such discussions during recent talks in Washington.
While Tuesday brought some calm after the Taiwan dollar’s 10% two-day surge, volatility remained high. Traders across the region reported heavy volumes and difficulties executing trades, suggesting strong momentum behind the sell-off in U.S. dollars. Hong Kong’s dollar approached the strong end of its peg, and the Singapore dollar reached near decade highs.
“Trump’s policies have weakened the market’s confidence in the performance of U.S. dollar assets,” said Gary Ng, senior economist at Natixis. Morgan Stanley’s Robin Xing echoed that sentiment, calling the tariff decision a "wake-up call" for investors.
Asia’s largest foreign currency reserves remain massive. China alone holds nearly $960 billion in foreign currency deposits, the highest in almost three years. In tandem, signs are emerging that institutional investors — including pension funds and insurers — are scaling back unhedged positions in U.S. assets. UBS estimates that Taiwanese insurers alone could offload up to $70 billion in U.S. dollar exposure if they return to pre-2021 hedging levels.
Adding to the signal, Hong Kong’s de-facto central bank announced it has been reducing U.S. Treasury holdings and increasing its exposure to non-dollar assets.
A long-favored “free-money” trade that profited from buying U.S. dollars in Hong Kong dollar forwards is now being rapidly unwound. “Macro funds and leveraged players have hundreds of billions of dollars in the HKD forwards free-money trade, and now they are unwinding,” said Mukesh Dave, chief investment officer at Aravali Asset Management in Singapore.
Meanwhile, bond market rallies across Asia suggest capital is repatriating. “Repatriation talk is becoming reality,” said Parisha Saimbi, strategist at BNP Paribas, noting a growing shift away from the dollar.
Taiwan's central bank has pledged to stabilize the local currency, and even the island's president publicly insisted that the exchange rate was not part of trade negotiations. Nonetheless, market signals appear clear.
“USD/TWD is a canary in the coal mine,” said Brent Donnelly, president at Spectra Markets. “Asian demand for U.S. dollars and Asian central bank desire to support the U.S. dollar is waning.”
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