Travelling Down Under? Spending could be hit as Aussie dollar nears one-year high against Singdollar

Published Mon, Apr 27, 2026 · 01:47 PM

[SINGAPORE] The Australian dollar has climbed to its strongest level against the Singapore dollar in a year, putting a damper on Singaporean travellers to the country, as well as those who study there or buy Australian-made products.

The uptrend is buoyed by rising commodity prices and expectations that the Australia central bank will keep interest rates higher for longer.

The Australian dollar was trading at about 0.9112 Australian dollars per Singdollar on Apr 24, just below its one-year high of 0.9152 reached on Apr 17.

It rose 1.54 per cent against the Singapore dollar in 2025, and has gained a further 6.1 per cent in 2026 so far, according to Bloomberg data.

A stronger Australian dollar means that Singaporeans are getting less bang for their buck, making spending on education and travelling Down Under more expensive.

The stronger Aussie currency also makes Australian produce such as meat, dairy products and wine more costly to import. Consumers could feel the pinch should retailers choose to pass on the higher import costs, noted OCBC Bank foreign exchange strategist Christopher Wong.

The Australian dollar’s strength is largely driven by its role as a “commodity currency”, with rising prices for key Aussie exports such as natural gas, iron ore, lithium and gold lifting demand for the currency.

Saktiandi Supaat, head of foreign exchange research at Maybank, explained that as a resource exporter, “Australia can benefit when oil and commodity prices rise, unlike many energy-importing economies”.

He noted that the Australian dollar has been supported by stronger terms of trade alongside resilient demand from China for Australian exports.

The Reserve Bank of Australia has also kept interest rates relatively high to tackle persistent inflation, which is drawing foreign investors seeking better returns and helping to keep the Aussie dollar strong.

This shows that while Singapore’s monetary policy generally supports the Singapore dollar against a basket of currencies, it can still weaken against specific currencies like the Australian dollar when those currencies are driven higher by their own factors, said Saktiandi.

The Monetary Authority of Singapore (MAS) on Apr 14 tightened its monetary policy stance for the first time since 2022 to allow for a stronger currency to manage inflation as oil and natural gas prices jumped from the Iran War.

Saxo sales trader Sean Teo said the Australian dollar will continue to stay strong due to expectations that the Reserve Bank of Australia will keep interest rates higher for longer to counter persistent inflation.

In contrast, the Singapore Overnight Rate Average – a key benchmark for borrowing costs – is around 1 per cent, which is well below Australia’s rate of about 4 per cent.

This gap has made the Australian dollar more attractive to investors, said Teo.

He noted that while the Australian dollar has also strengthened against most major currencies, the Singapore dollar is managed within a policy band, which can limit how much it strengthens once it nears the upper end of that band.

OCBC’s Wong noted that in the early stages of the Iran conflict, the Singapore dollar held up better than the Australian dollar, supported by MAS’ policy and its role as a more stable currency during periods of geopolitical stress.

But the trend has reversed since the ceasefire between the US and Iran, with the Australian dollar gaining ground as market sentiment turns more positive.

“The next phase depends on whether markets remain defensive or turn more risk-on. If geopolitical uncertainty persists, including tensions around the Strait of Hormuz, recent Australian dollar to Singapore dollar gains may stall,” said Wong.

“But if sentiment continues to improve, there is room for further upside, with our year-end forecast at 0.95 Australian dollar per Singapore dollar,” he said. THE STRAITS TIMES