The SGD to JPY exchange rate is currently trading at 120.6, representing a 2.4% increase compared to its three-month average of 117.8. This figure has remained relatively stable, fluctuating within a 6.0% range between 114.2 and 121.0. The recent monetary policy adjustments by the Monetary Authority of Singapore (MAS) play a significant role in shaping the outlook for the Singapore dollar. In January 2025, MAS eased its monetary stance, allowing for a slower appreciation of the SGD amidst lower-than-expected inflation projections. However, economic growth surpassed expectations, notably a 2.9% year-on-year increase in the third quarter of 2025, which may support the SGD's strength.
On the other hand, the Japanese yen faces pressures stemming from potential interest rate hikes indicated by the Bank of Japan (BOJ), with Governor Kazuo Ueda signaling an increase from 0.5% to 0.75% in December. This marks the first rate hike since January 2025 and aims to address ongoing inflation concerns. However, economic uncertainty persists as Ueda has noted challenges in determining future rate hike trajectories. The yen's sustained weakness against major currencies, including trading near 155 against the U.S. dollar, raises alarm among analysts, highlighting potential risks to Japan's economic fundamentals.
The external environment is also contributing to currency pressures. The SGD has faced downward pressure in previous months due to escalating U.S. trade tensions affecting key exports, while the recent decline in oil prices, trading at 30-day lows near 61.20 and 4.9% below its three-month average, may further impact both currencies. Analysts suggest that ongoing economic developments, including fiscal policies in Japan aimed at reflation, will be critical in shaping currency dynamics moving forward.
In summary, while the SGD has strengthened due to positive economic performance from Singapore, concerns about the yen's weakness and the uncertain path of BOJ's monetary policy could shape the SGD/JPY exchange rate in the coming months. Monitoring these developments will be essential for individuals and businesses engaged in international transactions involving these currencies.
