Singapore banks face currency split as ringgit offsets losses

DBS is most exposed to IDR and INR, whilst the ringgit cushions OCBC and UOB.

Banks in Singapore face foreign currency risks tied to the Middle East conflict as the Indian rupee (INR) and Indonesian rupiah (IDR) weaken whilst the Malaysian ringgit (MYR) appreciates.

Amongst Singapore’s big three banks, DBS is most affected by exposure to IDR and INR, according to UOB Kay Hian (UOBKH). Its exposure accounted for 7.4% of its total income in 2025.

OCBC and UOB also both have exposures to the IDR, accounting for 7.2% and 4.6% of their total income in 2025, respectively.

This weakness is partially offset by their Malaysia exposure, which accounted for 12.7% and 12%, respectively, of OCBC’s and UOB’s total income last year.

The Singapore dollar (SGD) strengthened 0.7% against the US dollar (USD) in the first five months of 2026. This reflects Singapore’s strong fiscal standing and the resiliency of its financial system, said UOBKH analyst Jonathan Koh.

In contrast, the IDR and the INR have been the worst affected, depreciating 7.4% and 6%, respectively, against the SGD over the same period.

The Malaysian ringgit (MYR) appreciated 1.6% against the SGD in the 5M 2026 period.

Indirect beneficiaries
Singapore banks are benefitting indirectly from the Middle East conflicts, which is driving deposit growth and wealth management inflows into local banks, according to UOBKH.

These inflows support balance sheet liquidity, fee-based income—especially in wealth management—and trading activities, said Koh.

“Heightened geopolitical uncertainties have reinforced Singapore’s safe-haven appeal, driving deposit growth and wealth management inflows into local banks, particularly from Middle East-based clients reallocating assets away from perceived riskier jurisdictions in the Gulf region, such as Dubai,” Koh wrote in a report on 10 June 2026.

The banks benefit indirectly from conflicts in the Middle East as global investors and high-net-worth individuals seek stability and asset protection in politically neutral, well-regulated financial hubs, Koh added.

Singapore’s bank are attractive yield plays given the current low-interest rate environment in the country, Koh said.

“The sustainability of their dividend payout is supported by resilient earnings, strong capital adequacy and discipline in capital management,” he said.