Yen weakens as Japan election results raise uncertainty

Japanese yen dropped to a three-month low on Monday after Japan’s ruling coalition lost its parliamentary majority in weekend elections, leading to expectations of slower interest rate hikes.

Meanwhile, the US dollar was on track for its largest monthly gain since April 2022. The dollar reached a high of 153.88 against the yen, marking the yen’s weakest level since July.

The yen was trading down 0.2 per cent at 152.65 against the dollar, with a 6.4 per cent decline in October, the largest among G10 currencies.

The dollar has been gaining strength due to various factors, including a robust US economy and expectations of a potential Donald Trump presidency. The dollar index has risen 3.6 per cent in October, marking its largest monthly gain since April 2022.

The euro has also been under pressure, with analysts predicting further declines if the US implements protectionist trade policies. Additionally, the European Central Bank’s potential rate cuts could further weaken the euro.

Other currencies, such as the Australian and New Zealand dollars, have also weakened due to concerns about China’s economic slowdown and potential global trade tensions.

Attribution: Reuters

Subediting: Y.Yasser