For decades, Asia has played an increasingly vital role in global finance, particularly within the foreign exchange (forex) market. While London and New York traditionally dominate global trading volumes, two Asian cities—Singapore and Tokyo—stand as the region’s leading hubs for forex activity. Both are globally respected financial centers, home to some of the world’s largest banks, hedge funds, and institutional investors. Yet the question remains: which of these cities truly deserves the title of Asia’s forex capital?
To answer this, we must examine their histories, regulatory environments, infrastructures, trading volumes, and economic ecosystems. This article will explore how Singapore and Tokyo evolved into dominant forex hubs, compare their key strengths and weaknesses, and discuss the implications for traders, institutions, and global investors.
The Rise of Asian Forex Hubs
The global forex market functions 24 hours a day, moving across regions as time zones shift: first Sydney, then Tokyo, followed by London and New York. In Asia, Tokyo traditionally served as the region's leading financial center during trading hours. However, in the last three decades, Singapore has rapidly emerged as a powerful competitor—driven by its liberal market policies, technological infrastructure, and strategic location between East and West.
Today, both Tokyo and Singapore handle hundreds of billions in daily forex transactions. Yet, their roles differ subtly: Tokyo remains deeply connected to Japan’s domestic institutions and yen-centered trading, while Singapore has evolved into a multi-currency, globally integrated financial hub bridging Asia with the rest of the world.
Historical Background
Tokyo: The Veteran Powerhouse
Tokyo’s rise as a financial hub dates back to the post-World War II reconstruction era. Japan’s booming export-led economy, coupled with the global expansion of the yen as a reserve currency, gave Tokyo natural prominence in foreign exchange trading. By the 1980s, the yen became one of the world’s most traded currencies, and Tokyo’s forex market was central to global liquidity flows. Large Japanese banks such as Mitsubishi UFJ, Mizuho, and Sumitomo Mitsui developed extensive global networks, anchoring Tokyo’s role in international finance.
However, Japan’s prolonged deflationary period in the 1990s and its complex regulatory structure slowed Tokyo’s momentum. While it remains a financial giant, the city’s rigid bureaucracy and higher operational costs have, in recent decades, limited its ability to adapt to the dynamic and highly digitalized world of modern forex trading.
Singapore: The Challenger Turned Champion
Singapore’s ascent was far more recent—and arguably more strategic. From the 1970s onwards, Singapore’s government deliberately positioned the city as a neutral, low-tax, pro-business environment for international capital. Its policymakers established transparent regulations, nurtured English-speaking financial talent, and invested heavily in infrastructure and technology. As global financial flows increasingly sought efficiency and flexibility, Singapore became an ideal alternative to Tokyo’s more conservative environment.
By the early 2000s, Singapore had become a regional hub not just for forex, but also for commodities, derivatives, and asset management. Its central time zone allows overlap with both European and American markets, making it a key link in the 24-hour trading chain. Today, Singapore frequently ranks among the top three global forex centers—alongside London and New York—according to the Bank for International Settlements (BIS).
Regulatory Frameworks and Institutional Environments
Monetary Authority of Singapore (MAS)
The MAS serves as both Singapore’s central bank and financial regulator. Its framework emphasizes transparency, innovation, and global cooperation. MAS policies encourage the use of advanced trading infrastructure, algorithmic systems, and fintech integration. Furthermore, the regulator’s pragmatic approach toward new technologies—such as digital assets and blockchain—has attracted global players seeking forward-looking jurisdictions.
MAS’s philosophy revolves around balance: maintaining strict anti-money-laundering (AML) standards while allowing market participants freedom to innovate. This regulatory clarity makes Singapore particularly appealing to multinational banks and hedge funds that require predictable, rules-based environments.
Financial Services Agency (FSA) of Japan
Japan’s FSA, in contrast, operates under a more conservative model rooted in financial stability and consumer protection. While effective in maintaining systemic resilience, it has been criticized for being less flexible in adapting to market innovations. The heavy compliance and licensing processes can discourage smaller or foreign firms from establishing a presence in Tokyo.
Additionally, language and cultural barriers have historically limited Japan’s integration with global forex players. While large institutions such as Nomura and Daiwa maintain strong international footprints, Tokyo’s domestic market remains more inward-looking than Singapore’s cosmopolitan environment.
Trading Volumes and Market Depth
According to the latest Bank for International Settlements (BIS) Triennial Survey, Singapore has overtaken Tokyo in daily average forex turnover. In 2022, Singapore accounted for roughly **9% of global daily FX turnover**, while Tokyo contributed around **4.4%**. This makes Singapore the world’s third-largest forex center—behind only London and New York.
The reasons for this divergence are structural. Singapore’s open capital account and diverse participant base—spanning commercial banks, hedge funds, high-frequency trading firms, and multinational corporations—create deep liquidity across multiple currencies. Tokyo’s market, while enormous, remains more focused on yen-denominated flows and institutional clients, resulting in lower cross-currency activity.
Key Market Characteristics
| Feature | Singapore | Tokyo |
|---|---|---|
| Global FX turnover share (2022) | ~9% | ~4.4% |
| Main currencies traded | USD, SGD, EUR, JPY, AUD, CNH | USD, JPY, EUR |
| Trading style | Multi-currency, algorithmic, global clients | Yen-focused, institutional, domestic-oriented |
| Time zone advantage | Overlaps Europe & U.S. | Overlaps Sydney & early Europe |
Infrastructure and Technology
Both cities boast world-class infrastructure, but the nature of their technological ecosystems differs significantly.
Singapore’s Fintech and Digital Edge
Singapore has invested billions in fintech ecosystems and smart nation initiatives. The city-state’s government and MAS actively partner with private firms to advance digital banking, API-driven infrastructure, and algorithmic trading systems. Colocation services, low-latency connections, and partnerships with major data centers (such as Equinix and AWS) make Singapore one of the fastest and most reliable hubs for electronic trading in Asia.
Furthermore, Singapore’s support for digital assets and stablecoin frameworks has attracted global fintech startups, crypto funds, and hybrid forex platforms that view Singapore as the gateway to the Asian digital economy.
Tokyo’s Technological Tradition
Tokyo’s infrastructure is equally advanced, but more concentrated within established financial institutions. Japan has a strong domestic technology base—especially in automation, robotics, and telecommunications—but fintech adoption has been slower due to regulatory caution. Tokyo Exchange Group’s initiatives in modernizing trading systems are commendable, yet the pace of integrating open APIs, blockchain testing, or decentralized finance applications remains modest compared to Singapore’s aggressive push.
Economic and Strategic Context
Singapore and Tokyo’s forex dominance also reflects their broader economic roles in Asia.
Singapore: Gateway Between East and West
Singapore’s unique advantage lies in its geography and diplomacy. It serves as a neutral hub for regional and international flows—connecting Southeast Asia, China, and India with Europe and the U.S. Its free-trade agreements and political stability have made it a magnet for multinational corporations and asset managers seeking regional headquarters. The strength of the Singapore Dollar (SGD), backed by MAS’s exchange-rate–based policy, enhances trust in the country’s financial system.
Tokyo: Anchor of Yen Liquidity and Institutional Depth
Tokyo’s economic strength lies in its scale. Japan is the world’s third-largest economy, and the yen remains a major reserve and funding currency. The Tokyo market is essential for yen liquidity, Japanese government bond trading, and global carry trades. Its vast pension and insurance sectors provide deep, stable capital pools unmatched by most Asian markets. However, the challenge for Tokyo is to translate this domestic strength into a more outward-facing, internationally integrated trading ecosystem.
Talent, Lifestyle, and Business Environment
Attracting and retaining top talent is critical for maintaining a financial center’s competitive edge. On this front, Singapore and Tokyo diverge sharply.
Singapore’s Cosmopolitan Magnetism
Singapore’s open immigration policies, high quality of life, and English-speaking environment make it attractive for global finance professionals. The city’s safety, efficient public services, and relatively low personal taxes enhance its appeal. Moreover, the government’s efforts to build a diverse workforce—where Western, Chinese, Indian, and Malay cultures intersect—create a uniquely global talent ecosystem. For foreign institutions seeking a base to cover Asia-Pacific operations, Singapore offers unmatched accessibility.
Tokyo’s Cultural and Logistical Challenges
Tokyo’s work culture, language barrier, and stricter visa policies make it harder for international firms to recruit global talent. Although Japan offers excellent infrastructure, healthcare, and safety, the rigidity of its corporate culture and limited English proficiency can deter younger, mobile professionals in finance. Efforts to internationalize Tokyo—such as English-based regulatory documentation and corporate reforms—are underway but progressing slowly.
Market Perception and Global Influence
Perception matters. In global forex trading, confidence, transparency, and agility determine where capital flows. In this regard, Singapore’s brand is one of innovation and reliability, while Tokyo’s is one of scale and legacy. Investors view Singapore as the future-oriented Asian hub for multi-asset, technology-driven finance, whereas Tokyo remains a bastion of traditional strength, especially for yen liquidity and institutional stability.
Challenges Facing Both Hubs
Neither city’s dominance is guaranteed. Both face external pressures and internal constraints.
Singapore’s Challenges
- Rising operational costs: Real estate and labor costs have surged, challenging smaller firms and startups.
- Regulatory balancing act: MAS must maintain credibility while accommodating innovation in crypto and fintech.
- Talent saturation: The influx of global professionals raises competition and housing costs.
- Geopolitical risks: Singapore’s neutral stance requires careful navigation amid U.S.–China tensions.
Tokyo’s Challenges
- Demographic headwinds: Japan’s aging population reduces workforce dynamism.
- Slow digital adoption: Bureaucratic inertia hinders financial modernization.
- Taxation and language barriers: Discourage foreign participation.
- Limited global integration: The yen market remains domestically anchored.
Future Outlook: Complementarity or Competition?
In truth, Singapore and Tokyo are not pure rivals—they are complementary nodes within the global forex network. Tokyo anchors yen liquidity and serves Japan’s institutional base, while Singapore facilitates cross-border flows across currencies and regions. As capital markets evolve toward automation and 24-hour digital infrastructure, Singapore’s flexibility and MAS’s progressive stance position it as Asia’s leader in the next generation of forex markets. However, Tokyo’s depth, credibility, and institutional power ensure it remains indispensable.
Over the next decade, we may see a dual structure: Tokyo remains dominant for yen and domestic transactions, while Singapore becomes the regional hub for multi-currency and fintech-integrated forex ecosystems. Rather than “winner-takes-all,” Asia benefits from both thriving in their respective domains.
Comparison Table: Singapore vs Tokyo at a Glance
| Factor | Singapore | Tokyo |
|---|---|---|
| Regulator | Monetary Authority of Singapore (MAS) | Financial Services Agency (FSA) |
| Global FX turnover rank | 3rd globally | 6th globally |
| Market focus | Cross-border, multi-currency, fintech | Domestic, yen liquidity, institutions |
| Language environment | English | Japanese (limited English integration) |
| Time zone advantage | Overlaps with Europe and U.S. | Overlaps with Oceania and early Europe |
| Technology environment | Fintech-friendly, API-based, agile | Conservative, slower fintech adoption |
| Talent base | Global, diverse, expatriate-friendly | Local, institutional, language-limited |
Conclusion
So, which city truly deserves the title of Asia’s forex capital? The answer depends on how one defines leadership. If we measure by trading volume, global connectivity, and technological innovation, Singapore clearly leads. It has surpassed Tokyo in daily turnover, embraced fintech integration, and created an ecosystem that welcomes global traders and institutions alike.
However, if we consider economic depth, institutional strength, and historical influence, Tokyo retains unmatched gravitas. Its yen liquidity, domestic capital pools, and global institutional networks remain foundational pillars of Asian finance.
Ultimately, the future of forex in Asia will not be about one city defeating the other—it will be about how both evolve symbiotically. Singapore will continue leading the region into digital finance and cross-border integration, while Tokyo preserves its role as the cornerstone of yen markets and traditional financial discipline. Together, they ensure that Asia remains a powerhouse within the global forex ecosystem.
Frequently Asked Questions
Why has Singapore overtaken Tokyo in forex trading volume?
Singapore’s rise stems from its open regulatory environment, advanced technology infrastructure, and favorable time zone. MAS encourages global participation and innovation, allowing liquidity to flow freely across currencies. Tokyo’s regulatory rigidity and yen-focused market limit its international diversification.
Is Tokyo still relevant in global forex markets?
Absolutely. Tokyo remains vital for yen liquidity, global bond trading, and institutional finance. While its international role has declined relatively, it remains indispensable for Asian and global investors seeking exposure to Japan’s financial system.
Which city is better for forex professionals to work in?
Singapore offers easier relocation, English-speaking business culture, and higher international diversity. Tokyo provides prestige, depth, and institutional exposure—but often requires language adaptation and longer integration periods.
Could another Asian city challenge both in the future?
Hong Kong once held similar prominence, but political uncertainty has diminished its appeal. Emerging contenders like Shanghai and Seoul are developing rapidly but remain constrained by capital controls or scale. For the foreseeable future, Singapore and Tokyo will remain Asia’s twin pillars of forex trading.
Note: Any opinions expressed in this article are not to be considered investment advice and are solely those of the authors. Singapore Forex Club is not responsible for any financial decisions based on this article's contents. Readers may use this data for information and educational purposes only.
