Dilhan Pillay, CEO of Singapore's state investment firm Temasek, stated the company has been "forced to hedge" against US dollar risks this year, citing currency weakness as a significant concern for foreign investors.

"Hedging costs have risen now because I observe everyone is hedging," Pillay remarked during Wednesday's Bloomberg New Economy Forum in Singapore. "My hedging expenses have become prohibitively high, compelling me to explore natural hedging alternatives."

Pillay explained this necessitates Temasek seeking investments where net returns sufficiently offset currency risks. "Certain dollar-denominated assets fail to generate returns justifying our investment allocations," he noted.

The Bloomberg Dollar Spot Index has declined nearly 7% year-to-date, with the greenback weakening approximately 5% against the Singapore dollar. While the US remains the preferred investment destination for major institutions and asset managers, dollar depreciation has eroded returns for non-USD investors.

Temasek has increased its US exposure in recent years, with Americas accounting for nearly a quarter of its S$434 billion (US$333 billion) portfolio as of March. The firm committed US$30 billion in US investments over five years starting July 2024.

Pillay emphasized the US market's unique appeal remains intact, highlighting continued strong foreign capital inflows into American capital markets.