THE Singapore dollar is expected to strengthen to $1.18 against the US dollar over the next 12 months, said a strategist from Goldman Sachs.

It is currently trading at about $1.22 per US dollar.

The investment bank is also bullish on the Singdollar over the longer term. It expects the local currency to hit $1.15 to the greenback between 2014 and 2016.

Goldman's Asean economist Mark Tan said the Monetary Authority of Singapore recently raised the Singdollar's pace of appreciation on a trade-weighted basis to about 3 per cent.

He expects this "default pace of appreciation" to remain in the face of the "new normal" of slower growth and high inflation.

In terms of equities, Goldman has upgraded the Singapore market to overweight, with a target of 3,500 points for the Straits Times Index at end-2013.