Yen Loses Heavily as Japan Readies for Early Elections

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Yen Loses Heavily as Japan Readies for Early ElectionsThe yen dropped versus the euro and fell to its lowest level in over seven years versus the euro after Japanese Prime Minister Shinzo Abe postponed a scheduled sales-tax hike and called an early poll.

The yen fell 0.8 percent to trade at 146.36 per euro as of 12:01 p.m. in New York, after earlier touching 146.70, its lowest level since October 2008. The Japan’s currency dropped to 117.05 per dollar, equaling the lowest level since October 2007m before easing to 116.75. The euro advanced 0.7 percent to $1.2538.

“The market has really been on the lookout for such a development,” Omer Esiner, a Washington-based chief market analyst at the currency brokerage Commonwealth Foreign Exchange Inc., told Bloomberg News. “This will keep the yen bias broadly lower.”

The yen has depreciated nearly 1.5 percent versus the dollar ever since Yomiuri newspaper announced on Nov. 11 that Abe will roll out various measures aimed at turning around the economy which slid into recession in the July-September quarter. A report released on Nov. 16 showed that Japan’s economy dropped by 1.6 percent in the third quarter, compared with a decline of 7.3 percent in the previous quarter.

Meanwhile, the Swedish krona advanced after Riksbank Governor Stefan Ingves disclosed that the central bank won’t intervene in currency markets as the krona is trading within the expected levels. The krona surged 1 percent to 7.3638 per dollar.

The Russian ruble rose ahead of the impending tax season, advancing 0.6 percent to trade at 46.8265 per dollar. The demand for the ruble is expected to grow further as companies remit taxes worth about 700 billion rubles ($15 billion) between Nov. 20 and Nov. 28. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com