The Singapore dollar is staying strong as global investors pile into the local market.

The currency hit its highest level against the greenback in nearly three years last Friday, reaching about $1.3256.

That was partly due to weakness in the United States dollar and an improving risk appetite that is driving cash into Singapore assets, said Maybank Singapore on Monday.

There was a slight dip on Monday and again yesterday with the Singdollar at $1.3361 last night, similar to levels seen in May 2015, according to Bloomberg.

The fund inflow is already having its effect on the Straits Times Index, which has been steadily gaining. It closed 0.36 per cent higher at 3,524.65 yesterday and is already up 3.6 per cent since Jan 2.

The positive sentiment for the Singdollar and other Asian currencies is due to a synchronised global recovery which has emboldened investors.

By the same token, the US dollar tends to be counter-cyclical, which means that when things are positive, fund flows tend to go to other global assets. OCBC global treasury research has forecast the Singdollar to hit $1.30 to US$1 by the end of this year.

"This is on the back of a wobbly US dollar, a resilient growth environment and supportive risk appetite, especially for Asian equities," said Ms Selena Ling, OCBC head of treasury research and strategy.

"It remains to be seen if the US' tax reform and jobs Act can turn the tide for the dollar by raising US growth and inflationary expectations further out," Ms Ling added.