Want to load up on US stocks with a weaker greenback? Here’s what investors need to consider

[SINGAPORE] With the greenback much weaker than it was just a year ago – and expected to soften further – investors in Singapore might be wondering if they should buy US stocks to tap the favourable exchange rate.

The US dollar index, which tumbled to a nearly four-year low in late January, has inched up higher, last trading at 97.6 on Thursday (Feb 19) evening. That’s still off its year-high of around 107.2 in late February 2025.

A flock of Asian currencies is strengthening, although, besides the greenback, movements in other currencies – such as the Malaysian ringgit, Thai baht and Singapore dollar – are at play.

The USD/SGD pair reached S$1.268 on Thursday, marking a 5.6 per cent decline from a year ago. 

Investors in Singapore may take this as an opportunity to load up on US stocks, which are among the top traded asset classes in the city-state. Popular counters include Nvidia and Tesla, based on 2025 data from brokerages such as moomoo, FSMOne and iFast. 

However, should investors really tap the weak US dollar, or are there other considerations when trading in a foreign currency? Here’s what experts say.

Singdollar strength

US assets may look attractive to investors who expect long-term US dollar strength. If the greenback is strong when they want to cash out, then they would benefit after selling the assets and converting back into Singdollars, said James Ooi, market strategist at Tiger Brokers.

“However, there is a growing view that the SGD may continue to appreciate, largely driven by sustained capital inflows,” he noted. “This could deter some investors from allocating to US assets, as further SGD strength would erode USD-denominated returns.”

Isaac Lim, chief market strategist at Moomoo Singapore, also flagged that brokers and banks charge a conversion fee both ways when changing Singdollars to US dollars and back again.

Such conditions will erode gains made by foreign investors of US assets, on top of how, when a US stock stays flat now, the investor starts off with a “slight disadvantage”.

“Singaporean investors would do well to remember that at the end of the day, they are consuming in SGD,” said Lim. “It would be in their interests to reduce paying unnecessary (fees) as far as possible, and where possible.”

Planning how much to convert and invest in the US markets, to avoid frequent charges back and forth, would reduce foreign-exchange and platform fees, he added.

But Ooi reasoned that if investors believe that asset price appreciation can outweigh the greenback’s depreciation, then US assets could stay attractive.

“USD depreciation is an ongoing risk that Singapore investors need to accept when holding US assets,” he said. “One preferred approach is to increase exposure to growth-oriented stocks, as their higher return potential – albeit with higher drawdown risk – can help offset currency depreciation over time.”

30% dividend withholding tax

Another point to note is that while foreign investors of US stocks may not be subject to capital gains tax in the US, the dividends of their holdings are.

A 30 per cent dividend withholding tax is automatically deducted from the dividends of US companies that Singapore-based investors hold.

A weaker US dollar would hence be “more punitive” for Singapore investors who rely on US dividend stocks for income than non-dividend US stocks for long-term capital appreciation, said Joel Phua, research analyst of the research and portfolio management team at FSMOne Singapore.

He explained that the dividend withholding tax “locks in a loss on every dividend received” permanently, on top of a weaker greenback reducing real purchasing power when funds are converted back to Singdollar for local spending.

However, investors may be looking more at capital returns with their US stocks, which are largely known for growth names such as Amazon and Nvidia.

“Many Singapore investors do not place a strong emphasis on dividend yields when investing in US equities,” said Tiger Brokers’ Ooi.

“This is considering the 30 per cent withholding tax on dividends already reduces net dividend income, and the fact that US stocks typically offer lower dividend yields, compared with Singapore Exchange-listed stocks.”

For Singapore investors, large-cap US growth and AI stocks “remain appealing, as their upside potential may better offset currency headwinds”, he added.

How to invest

Ooi flagged that there may not be an “urgent need” to diversify away from US assets, too, as policy shifts associated with Kevin Warsh – likely to be the next US Federal Reserve chair – could support a stronger US dollar over the long term.

Phua said that, if anything, US multinationals with a “high share of foreign-sourced revenue” may be of interest to investors now, as these companies tend to benefit when overseas earnings are translated back into a weaker US dollar in the current environment.

“The decision to add US assets should not be driven by currency movements alone, but also by the underlying valuations and fundamentals of individual companies,” he added.

Moomoo Singapore’s Lim said that investors can consider US Treasuries, which are generally exempt from dividend taxes.

Additionally, broad US indices can also be invested in via London-domiciled UCITS funds.

“Here, instead of the usual 30 per cent dividend withholding taxes, investors would only be paying 15 per cent,” he noted.

Phua said Singaporean investors can consider switching to Singdollar-hedged share classes for funds, focusing on US companies whose earnings growth and expected returns can outpace a declining US dollar.

But for investors who are not keen on betting on a strong greenback or US stocks in 2026, sights will naturally set on Asian equities, market watchers note.

“Beyond emerging markets, we are positive on Singapore equities, as the market is supported by policy tailwinds and steady earnings growth,” said Phua.

“The Monetary Authority of Singapore’s coordinated effort to improve the competitiveness and visibility of Singapore’s equity market could help narrow the longstanding valuation gap between the Straits Times Index and regional or global benchmarks.”

China is on the FSMOne Singapore research analyst’s radar, too. He has stayed constructive on the market heading into 2026, even after a strong rally in 2025.

“Private enterprises are receiving increased policy attention and funding, while technology remains a key growth driver as China’s AI capabilities scale rapidly,” Phua said.