The recent developments impacting the Singapore Dollar (SGD) and Japanese Yen (JPY) suggest a complex dynamic in their exchange rates. As of December 2025, the SGD is trading at 119.9 JPY, representing a 2.2% increase over its three-month average of 117.3. This recent rate has reflected a relatively stable range, fluctuating between 114.2 and 120.6 JPY.
In Singapore, the Monetary Authority of Singapore (MAS) adjusted its monetary policy earlier this year to allow a gradual appreciation of the SGD amidst external economic pressures and trade tensions with the U.S. Despite these external risks, the country's economy has shown stronger-than-expected growth, expanding by 2.9% year-on-year in Q3 2025. Analysts suggest that such positive economic indicators may help maintain the SGD’s resilience against the JPY.
Conversely, the JPY faces significant challenges as the Bank of Japan (BOJ) prepares to potentially increase interest rates for the first time since early 2025. Governor Kazuo Ueda has signaled a rate hike from 0.5% to 0.75%, intended to combat inflation and foster economic growth. However, uncertainties remain regarding the trajectory and scale of future rate increases, particularly as Japan grapples with the economic implications of a weak yen, presently trading near 155 against the U.S. dollar.
These pressures on the yen have raised concerns among analysts, who view the currency's weakness as a "ticking time bomb" that could undermine Japan's economic fundamentals. Additionally, the government's shift towards more reflationary fiscal policies might further complicate the monetary landscape, especially as it could impact foreign investments and Japan's purchasing power.
In relation to global oil prices, which can influence the yen, recent trends show crude oil trading at near 14-day highs at 63.75 USD, albeit slightly below its three-month average. Given Japan’s status as a significant oil importer, fluctuations in oil prices could further affect economic stability and the JPY’s performance.
In conclusion, while the SGD appears to be bolstered by solid economic performance and cautious monetary policy adjustments, the JPY's outlook is overshadowed by uncertainties related to inflationary pressures and ongoing economic challenges. Market participants may want to remain vigilant of these developments, as they will continue to influence the SGD/JPY exchange rate in the near term.
