Yen steadies after Japan’s ruling coalition loses upper house majority
The yen held its ground on Monday despite Japan’s ruling coalition losing its majority in the upper house, as markets had largely priced in the election outcome. The result, however, raises concerns about policy gridlock and fiscal uncertainty ahead of an August 1 deadline for U.S. tariff negotiations.
The yen strengthened slightly to 148.44 per dollar, while edging higher against the euro and sterling. Prime Minister Shigeru Ishiba’s Liberal Democratic Party won 47 seats, falling short of the 50 needed to maintain control of the 248-seat upper chamber. Although Ishiba pledged to remain in office, pressure is mounting following his earlier loss of the more powerful lower house, News.Az reports, citing Reuters.
“It remains unclear whether Ishiba can survive as prime minister and what it means for Japan’s trade negotiations with the U.S. Prolonged political uncertainty will be negative for Japanese assets, including the yen,” said Carol Kong, currency strategist at Commonwealth Bank of Australia.
The election setback comes as Japan struggles to finalize a tariff deal with U.S. President Donald Trump. Analysts warn that any leadership change could trigger foreign investors to sell Japanese shares and the yen. Meanwhile, the Bank of Japan is expected to hold back on tightening monetary policy amid heightened volatility.
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