The yen fell to a fresh 24-year low after Japan¡¯s ruling coalition expanded its majority in Sunday¡¯s Upper House election, with investors interpreting the result as a quasi-referendum on the country¡¯s super-easy monetary policy.
The currency fell as much as 0.9% against the dollar, breaching the closely watched 137 level. Bank of Japan Gov. Haruhiko Kuroda reiterated Monday that he won¡¯t hesitate to add monetary stimulus if needed to boost the stuttering economy.
A rise in Treasury yields and solid U.S. labor data on Friday has also given an additional boost to the dollar, which climbed against most of its major peers.
¡°The election outcome reflects public support for Prime Minister Fumio Kishida, and makes it clear that rising inflation in Japan isn¡¯t as critical for the public as in overseas,¡± said Juntaro Morimoto, analyst at Sony Financial Group Inc. ¡°It may make it easier for him to maintain current easy monetary policy during Kuroda¡¯s term, a view that lends to yen selling on receding expectations for a policy tweak.¡±
With the BOJ keeping interest rates pinned to the floor even as foreign ones climb, the yen has sunk over 16% against the greenback this year. The currency is just a hair¡¯s breadth away from its worst drawdown ever, according to data compiled by Bloomberg.
Japan¡¯s election came two days after the assassination of former Prime Minister Shinzo Abe, who was seen as a key supporter of the BOJ.
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