SINGAPORE: Analysts say that the Japanese yen is likely to make a recovery next year and strengthen against the Singapore dollar. This year, the yen was weakest against the Singapore dollar since 1985. The yen hit a record low of 111.6 against the Singapore dollar on Monday, its weakest since 2010, according to financial data provider MarketWatch’s records.
The Japanese yen has been weakening against the currencies of major economies because the Bank of Japan kept interest rates low while other central banks aggressively hiked interest rates. Higher interest rates typically attract money because deposits in the country’s currency would earn more interest. Ms Lye of Brandywine Global Investment Management said Japan’s central bank may tighten monetary policy next year. “That may cause the yen to appreciate in a more meaningful manner,” she said.
Japanese Finance Minister Shunichi Suzuki said on Tuesday (Nov 14) that the government would take all possible steps necessary to respond to currency moves. The yen has been under massive selling pressure this year, weighed down by the Bank of Japan’s pledge to maintain its ultra-easy monetary settings even as other developed economies have sought to keep rates higher for longer. Many in the market are focusing on interest rate differentials, with the prolonged monetary tightening in the US a factor in the recent forex moves, Bank of Japan’s deputy governor Shinichi Uchida told lawmakers at the parliament.
Similarly, on Monday (Nov 13), the yen rose sharply against the United States dollar. The United States dollar fell to 151.20 yen after hitting a one-year high of 151.92 earlier in the session. It was last trading at 151.49. About a year ago, S$1 could get you around 101 yen. Now, the same amount can buy more than 111 yen.
Over two million tourists visited Japan in September, 96.1% of the volume in the same month in 2019, the Japan National Tourism Organisation said in October. With the yen at its weakest, tourist spending will likely jump, too. According to another study by the Japan Tourism Agency, inbound visitors to Japan between July 1 and Sept 30 spent 1.39 trillion yen, 17.7% more than in 2019. This equates to 211,000 yen per person, up from 159,000 yen per person in 2019, the study found. /TISG