SGD/JPY Outlook:
The SGD/JPY rate is currently trading above its 90-day average and is near its recent highs. This suggests a bullish outlook as the Singapore Dollar is benefiting from strong economic performance against a backdrop of a normalizing monetary policy in Japan.
Key drivers:
• Rate gap: The Monetary Authority of Singapore has adopted a more accommodative policy, while the Bank of Japan is slowly raising interest rates, favoring the SGD.
• Risk/commodities: Oil prices have reached 90-day highs, supporting the SGD due to its impact on the regional economy, while negatively affecting the JPY as global risk appetite shifts.
• One macro factor: Singapore's GDP growth remains resilient, with a rate of 4.3% in Q2 2025, providing further support for the SGD.
Range:
Expect the SGD/JPY to hold within its recent stable range as both currencies show some volatility but trade in narrow bands.
What could change it:
• Upside risk: A significant rise in oil prices could further strengthen the SGD.
• Downside risk: Any unexpected deterioration in Japan's economic outlook could increase JPY demand as a safe haven, affecting the SGD/JPY rate.
