Sending payments in SGD
Sending a payment in SGD to other countries is usually not beneficial unless the recipient's account is in SGD.
Example:
- Recipient Account Currency: Australian Dollar (AUD)
- Your account with DBS: Singapore Dollar (SGD)
In the FX markets, a conversion from SGD to AUD involves 2 transactions implicitly:
- Conversion from SGD to USD
- Conversion from the resultant USD to AUD
These rates for these 2 transactions are 'crossed' to arrive at SGD/AUD rates. The following is a tabulation of the reasons why sending SGD to overseas banks will usually result in an inferior FX rate:
| Step 1: Conversion from SGD to USD | Step 2: Conversion from USD to AUD | Net result | |
|---|---|---|---|
| Send in SGD | SGD to USD conversion will be done by Australian bank. For them SGD is a minor currency, hence rates are usually not attractive. | USD to AUD conversion will be done by an Australian bank. Since USD is a universal currency, the rates are usually good. | For SGD/USD customer receives relatively unattractive rates. The overall rate may thus be not as good. |
| Send in AUD | SGD to USD conversion will be done by DBS bank. USD is a universal currency and DBS is recognised as one of the best FX providers*. | USD to AUD conversion will be done by DBS bank. USD is a universal currency and DBS is recognised as one of the best FX providers*. | Overall FX rate is likely to be more attractive. |
Important Notice:
*Winner of the "Best Foreign Exchange Provider Award for Southeast Asia" by Global Finance and "Best Foreign Exchange Bank in Singapore" by Finance Asia for 2014.