Yen Weakened by Political Uncertainty

25 Oct 2024 , 12:16 PM

Ahead of a Japanese election over the weekend that is expected to make the Bank of Japan’s (BOJ) intentions to normalise its policies more difficult, the yen lingered close to a three-month low on Friday and was on track for its fourth consecutive weekly loss.

Although it was still on track for another weekly gain, the dollar fell from its recent highs in the overall market as it followed the decline in U.S. Treasury yields.

Polls indicate that the ruling Liberal Democratic Party (LDP) may lose its long-standing hegemony in Japan, where voters will cast ballots in a general election on Sunday.

As it attempts to guide a smooth lift-off from near-zero interest rates, the BOJ’s rate hike path may be impacted by the uncertainties and potential for political upheaval. Next meeting dates for the central bank are October 30–31.

At 152 to the dollar, the yen was down 0.1% and was expected to lose 1.5% this week.

Although core consumer prices fell short of the BOJ’s 2% objective for the first time in five months, it had previously risen a little on the strength of somewhat better-than-expected Tokyo inflation data.

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