The strengthening Sing dollar against the US greenback will have little impact on the relocation and expatriate decisions of companies, say two HR consultants Human Resources magazine spoke to.

Last week, BNP Paribas SA’s senior foreign-exchange strategist forecasted that the Singapore dollar might rise to S$1.38 per dollar by July 2008. The French banking institution said that the appreciation in the dollar is likely to stem from the increase in tourism with events such as the Formula 1 race and the dollar will surpass the record high of $1.3835 of 1995. 

Mercer’s managing director, Su-Yen Wong said that the stronger dollar is will not dissuade companies from relocating their expatriates to Singapore, since the US currency has weakened significantly against other currencies and is not merely contained to Singapore alone.

Wong said, “We don't foresee the currency movements as being a significant factor in companies' decisions on relocation of expatriates to Singapore. Decisions as to where to locate expatriates are typically driven by broader concerns such as, where the companies, clients, or production facilities, or workforce are located.”

Wong also went on to say that expatriates are unlikely to be affected by the change. “Some companies concert home country salaries to the host country equivalent at the time of relocation, and subsequently handle payroll in the host country currency.” 

However, expatriates whose pay packages are based in US dollars will be affected by the weakening US dollar, says Jon Randall, who is Watson Wyatt’s ASEAN Regional Practice Leader of the Human Capital Group division. Randall explained that if the employee’s pay package includes a provision for currency protection, the weakening US dollar would mean that companies would find that it would cost more to retain the employee on the same compensation package.

On the other hand, employees whose packages do not include currency protection would find the value of their compensation packages dip. And when that happens, companies have to find ways to retain this group of employees whose pay packages have shrunk, Randall issued as an advisory. “Given the current tight market for talent, some employers may feel compelled to make adjustments in order to retain and engage their best people.”