The USD/SGD pair fell 0.4% to 1.2678, pushing the Southeast Asian currency to around 0.7887 versus the greenback.

The Singapore currency’s gain comes amid safe-haven flows and as the greenback was weighed down by speculation that the U.S. could be involved in Japanese foreign-exchange intervention, Bloomberg reported.

The city-state’s central bank, the Monetary Authority of Singapore, is expected to keep its currency policy unchanged at Thursday’s policy review, according to analysts.

Unlike most central banks, Singapore manages its monetary policy by adjusting its exchange rate rather than domestic interest rates. It allows the Singapore dollar’s nominal effective exchange rate, referred to as S$NEER, to move within a policy band and intervenes should the currency move outside that range, per Reuters.

Analysts at lender DBS noted that Singapore Government Securities have outperformed global counterparts amid fiscal uncertainty in other developed markets, drawing “flight-to-quality” inflows from investors cautious about fiscal risks in the U.S. and Europe, as quoted by The Business Times.

Maybank said the strength of the trade-weighted Singapore dollar is further “evidence of Singapore’s safe-haven appeal.”

DBS said its model shows the Southeast Asian currency is only about 0.25% from the top of its policy band. Hence, it expects further downside in the USD/SGD pair to be capped at around 1.2675.

Meanwhile, Quek Ser Leang, market strategist at UOB, forecast a sharper drop based on the daily chart.

“Given the sharp increase in downward momentum and the breach of the key support at 1.2700, USD/SGD is likely to weaken further, potentially toward the support at 1.2600,” he said, as quoted by The Wall Street Journal.