The exchange rate outlook for SGD to JPY is being significantly influenced by the ongoing trade tensions initiated by U.S. tariffs. Recent announcements of a 10% tariff on imports from Singapore and a 24% reciprocal tariff on Japanese goods have introduced considerable uncertainty in the currency markets. Analysts suggest that these trade barriers could curb risk appetite for regional currencies, including the Singapore dollar (SGD) and Japanese yen (JPY).
The SGD has shown resilience, recently trading at a seven-day high of approximately 113.6 JPY, which is 2.1% above its three-month average of 111.3 JPY. This uptick reflects a recent trend of stability within a 5.4% range from 108.0 to 113.8 JPY. Despite the punitive tariffs imposed by the U.S., Singapore's strong trade ties with the U.S. could mitigate some negative impacts on the SGD.
Conversely, the JPY, often considered a safe-haven currency, has been bolstered amidst the new tariffs and global economic concerns. MUFG Research forecasts a weakening trend for the yen against the U.S. dollar, with projections suggesting a fall to 154.00 by Q1 2025 and possibly down to 148.00 by Q4 2025. However, the recent depreciation of the yen might lead to a reassessment of these forecasts.
The Bank of Japan's (BoJ) monetary policies continue to shape the yen's performance. The recent global economic uncertainty, combined with Japan's ultra-low interest rates, keeps the yen in a complex position. While a stronger yen may hurt Japan's export-driven economy, it still attracts investors seeking safety in tumultuous times. Geopolitical tensions, particularly in Eastern Europe, have further reinforced the yen's status as a safe haven.
Moreover, oil price movements are also pertinent when analyzing the JPY. Current oil prices are trading at about 68.80 USD, 3.2% above the three-month average of 66.66 USD, reflecting market volatility within a range from 60.14 to 78.85 USD. Given Japan's reliance on imported energy, rising oil prices could potentially undermine the yen's value, making it crucial to monitor these developments closely.
In summary, the SGD to JPY exchange rate outlook remains entwined with global trade dynamics, monetary policy settings, and geopolitical factors. Stakeholders engaged in international transactions should be aware of these complexities as they navigate the current currency landscape.