Small Exchange: Singapore’s fintech investment return, UK travellers stung at airports and USD lags next to AUD
This week's currency news rounded up.
Singapore wins big in its bid to become SE Asia's new forex hub
Singapore has put its money on fintech and is seeing greater returns as more companies move in, with China's giant P2P lender, Lufax, being one of the latest additions to the neighbourhood. Embracing the fintech industry has been a big part of a long-term effort from Singapore to become South-East Asia's forex hub, and it's begun to see major results in recent years. As of April 2016, Singapore's average daily foreign exchange turnover was around $517 billion compared to $437 billion in Hong Kong, according to the South China Morning Post.
As more currency trading moves online, Singapore is enjoying the benefits of strong digital infrastructure and the attractiveness of having a lot of big and wealthy companies in one place.
"We chose Singapore as our headquarters as it has a very active forex currency trading market and a lot of high net worth clients,” says Michael Sturmm of forex trading platform OANDA. "More importantly, Singapore’s government has encouraged fintech, which has led many banks and financial firms to move in to capture opportunities."
Stephen Innes, senior trader at OANDA, also ascribes a lot of the appeal to Singapore's high-regulation environment, saying that "while some see the regulatory clampdowns as excessive, increased market surveillance will continue to appeal to investors, and one can only expect that electronic venues will continue flourishing despite increased regulatory oversight".
Fintech companies are voting on industry regulation with their feet and it seems that many of them enjoy the predictability of a stricter regulatory environment.
UK travellers stung by "what may be the worst ever" airport exchange rates over the weekend
The Guardian has reported that travellers at Cardiff Airport encountered "what may be the worst ever foreign exchange rates at British airports". Travellers were offered only EUR€0.88 for every pound they handed over last weekend, due to a difficult week on the market combined with the school holiday rush and an exceptionally busy day at the airport. Other airports weren't much better, with booths at Heathrow, Manchester and Glasgow offering almost 1:1 rates.
In addition to the perfect storm of market difficulties and a busy holiday period, the industry also ascribes much of the issue to higher staff and property costs at the airport. As poorer exchange rates affect more customers, airport booths also continue to lose business and need to charge even higher fees and even worse rates to stay afloat. Travellers who pre-purchased their currency to lock in better rates were doing well that day, as were those who used electronic currency exchange providers instead.
USD keeps dipping against AUD, with more Aussies taking advantage
The Australian dollar is on a roll, especially against the lagging USD. This doesn't make a huge difference to domestic prices, with the Reserve Bank of Australia (RBA) saying that a 10% appreciation of the Australian dollar will only lower the cost of consumer goods by "around 1% over a period of around three years".
It makes a much more significant difference when travelling to the US. As the AUD continues to rise against the USD from about 0.76 on 7 July to 0.79 on 18 July, it's a good time to visit the USA.
Plenty of Australians are taking advantage of the strong dollar. According to the Australian Bureau of Statistics (ABS), May 2017 saw a record-breaking 850,000+ Australians heading overseas.
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