If you're planning to exchange your Singapore dollars for an upcoming Japan trip, now might be a good time to do so.

The Singapore dollar reached a new high against the Japanese yen of S$1 to 120.02 yen on Jul. 11, 2024 at 6:07am, according to Google Finance:

Consistent lows

At the time of writing, the Japanese yen currently sits at 119.90 yen to S$1.

The Japanese yen has been weakening against the Singapore dollar in a series of record lows in the last few months since March 2024.

It previously hit a low of 118.21 yen to S$1 on Jun. 27, 2024.

On Apr. 26, it sunk to 116.02 yen to S$1.

Weakening yen due to new tax-free investment scheme

According to Nikkei Asia, the weakening yen is partly due to Japanese citizens buying overseas assets via a revamped tax-free investment scheme, namely the Nippon Individual Savings Accounts (NISA).

Japan, which has been suffering a trade deficit, has its investment trust management companies and asset management firms purchasing 6.16 trillion yen (S$51 billion) in international investments, more than they sold, in the first half of the year.

"Investment money tends to flow to Western and other countries where corporate and overall economic growth expectations are high," Japan Research Institute economist Soichiro Tateishi said, as quoted by Nikkei Asia.

As Japanese residents buy dollar-denominated stocks or bonds through mutual funds without currency hedging, they end up selling the yen against the dollar.

Rising foreign investments done via NISA contributed to lowering the value of the yen.

According to The Japan Times, the Bank of Japan continues to keep low rates and wavers on the reduction of bond purchases.

In the last year, the yen has gone down more than 15 per cent.

Top photo via Canva