Yen hits fresh low against the Singapore dollar on talk of snap election in Japan

TOKYO - The yen extended its record lows against the Singapore dollar following speculation that Japanese Prime Minister Sanae Takaichi may soon call a snap election.

The yen to Singdollar to spot exchange rate crossed the 123 level for the first time on Jan 13. The yen dropped to 123.5 per Singdollar at 5.04pm in Singapore, 0.4 per cent lower than the previous day’s close.

The Japanese currency, which fell 5.4 per cent against the Singapore dollar in 2025, has weakened another 1.3 per cent so far in 2026.

Against the US dollar, the yen hit its weakest level since July 2024. The Japanese currency fell as much as 0.5 per cent to 158.91 per US dollar, surpassing the previous low of 158.87 in January 2025.

The Nikkei share index, meanwhile, jumped as much as 3.6 per cent as local media said Ms Takaichi plans to dissolve Parliament when it reconvenes on Jan 23, setting up for a general election as soon as Feb 8.

With her popularity running high, going to the polls would likely cement her authority and bring a second wind to the so-called Takaichi trade, which has helped fuel bond losses and a weak Japanese currency.

The yen was the worst performer among its Group of 10 peers in 2025, gaining just 0.3 per cent against the dollar. Some yen watchers see the currency weakening to 160 per greenback or beyond by the end of 2026, driven by still-wide US-Japan yield gaps, negative real rates and persistent capital outflows.

Japanese officials, including Finance Minister Satsuki Katayama, have stepped up warnings against what they describe as excessive and speculative FX moves. She and US Treasury Secretary Scott Bessent shared concerns about the weakening yen during a bilateral meeting in Washington.

The risk of an official intervention is also back in focus. The Ministry of Finance last intervened in the currency market on July 12, 2024, when the dollar-yen hit a high for the day of 159.45. It intervened three other times that year when daily highs were 161.76, 160.17 and 157.99. Officials have indicated they are more concerned by volatility and the pace of moves than specific levels.

In Japan, intervention decisions are made by the Ministry of Finance and executed by the Bank of Japan through a handful of commercial banks. The government typically sells dollars to strengthen the yen in the spot market. BLOOMBERG