The Hidden Hedge: How a Surging USD Softened Last Friday’s Big Tech Rout for Me

Up til now, I have yet to disclose much about myself. A little bit about me, I am a 36 year-old from sunny Singapore embarking on a journey to find ‘picks & shovels’ small-cap companies that can eventually into serious multibaggers.

Now, back to the topic of the strengthening USD (against SGD) for the past week. While last Friday’s 2.6% drop in the S&P 500 and 4.2% tech-led Nasdaq rout sparked panic on Wall Street, I found an unexpected safety net. My USD-denominated portfolio benefited from the 1% rally in the USD/SGD exchange rate, driven by strong US jobs data and expectations of sustained high interest rates. The currency appreciation effectively cushioned my portfolio when converted back to SGD-equivalent, thereby absorbing over a third of the stock market's losses.

However, as my investment thesis focuses on hunting for multibagger companies, such foreign exchange fluctuations (while helpful at times) is largely viewed as short-term noise.

Note to self, experiencing a currency cushion feels great during a market downturn, but as a long-term investors, recognizing that currency volatility is a double-edged sword is key.

The Tailwinds: When the US market rallies and the USD strengthens simultaneously, Singaporean investors experience amplified gains (making outsized profits in SGD terms).

The Headwinds: The real danger occurs during a "strong SGD, weak US market" regime, or when US markets rise but a weakening USD dilutes your hard-earned stock gains.

Disclaimer: This post is not financial advice. Always do your own due diligence.