Japanese Prime Minister Shigeru Ihiba said he intended to stay, even when his ruling coalition is sure to lose control of the upper house in Sunday’s elections, according to Bloomberg.
While the vote does not determine directly if the ISHIBA government will fail, add political pressure to the leader, who had already lost control of the lower house, more powerful, in October.
The Democratic Liberal Party in Power and its ally Komeito lost its parliamentary majority, according to NHK national station, since the coalition failed to ensure the 50 seats necessary to maintain power. This is the first time since 1955 that a leader of the historic Japanese party would govern La Nación without a majority in at least one of the legislative bodies.
Market reaction
At the time of writing, the USD/JPY torque quotes 0.15% down in the day to quote in 148.58.
Japanese – frequent questions
The Japanese Yen (JPY) is one of the most negotiated currencies in the world. Its value is determined in general by the march of the Japanese economy, but more specifically by the policy of the Bank of Japan, the differential between the yields of the Japanese and American bonds or the feeling of risk among the operators, among other factors.
One of the mandates of the Bank of Japan is the currency control, so its movements are key to the YEN. The BOJ has intervened directly in the currency markets sometimes, generally to lower the value of YEN, although it abstains often due to the political concerns of its main commercial partners. The current ultralaxy monetary policy of the BOJ, based on mass stimuli to the economy, has caused the depreciation of the Yen in front of its main monetary peers. This process has been more recently exacerbated due to a growing divergence of policies between the Bank of Japan and other main central banks, which have chosen to abruptly increase interest rates to fight against inflation levels of decades.
The position of the Bank of Japan to maintain an ultralaxa monetary policy has caused an increase in political divergence with other central banks, particularly with the US Federal Reserve. This favors the expansion of the differential between the American and Japanese bonds to 10 years, which favors the dollar against Yen.
The Japanese Yen is usually considered a safe shelter investment. This means that in times of tension in markets, investors are more likely to put their money in the Japanese currency due to their supposed reliability and stability. In turbulent times, the Yen is likely to be revalued in front of other currencies in which it is considered more risky to invest.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
