The SGD to JPY exchange rate has recently reached 90-day highs near 122.0, which is 3.2% higher than its three-month average of 118.2. This performance comes amid a period of relative stability in the SGD to JPY rate, which has oscillated within a 6.8% range from 114.2 to 122.0. Analysts attribute this upward movement to several macroeconomic factors impacting both currencies.
In Singapore, the Monetary Authority of Singapore (MAS) has taken a more accommodative approach to monetary policy. Earlier in January, a reduction in the slope of the exchange rate policy band was implemented to support economic growth, especially as core inflation forecasts have fallen short of expectations. By October, stronger-than-anticipated GDP growth, which expanded by 2.9% year-on-year in Q3, prompted the MAS to maintain its current policy stance, presenting a positive outlook for the SGD.
Conversely, the Japanese yen has been under pressure due to internal economic challenges. Recently, the Bank of Japan (BOJ) indicated a potential interest rate hike from 0.5% to 0.75%, marking the first increase since early 2025. However, uncertainties around the pace and extent of future rate hikes due to Japan's estimated neutral interest rate have left markets cautious. The persistent weakness of the yen, trading close to 155 against the U.S. dollar, has raised concerns over its impact on economic fundamentals and purchasing power.
Additionally, the yen's stability has been threatened by Japan's changing fiscal policies, focusing on reflationary strategies under Prime Minister Sanae Takaichi. As analysts consider these dynamics, the JPY's vulnerability is compounded by oil prices, which currently stand at $60.53 per barrel—5.2% below their three-month average. The volatility in oil prices, with a range from $59.04 to $70.13, can significantly influence Japan's trade balance and overall economic outlook, further impacting the JPY.
In summary, the SGD's recent performance against the JPY appears bolstered by steady economic conditions in Singapore, while the JPY grapples with both domestic monetary policy uncertainties and external pressures from weak oil prices. Currency market watchers should stay attuned to these ongoing developments as they may affect future exchange rates.
