The yen slumped to the lowest in more than six months against the dollar on speculation Japanese elections next month will hand power to an opposition party that advocates more aggressive monetary easing.
Japanese Prime Minister Yoshihiko Noda will dissolve parliament tomorrow, triggering an election that polls show his party will lose three years after ending the Liberal Democratic Party’s half-century grip on power.
Yields on Japan’s benchmark 10-year bonds fell, matching the lowest level since July, on prospects the nation’s elections next month will hand power to the opposition party that advocates more aggressive monetary easing.
Japanese Prime Minister Yoshihiko Noda’s popularity sank to a new low as a standoff deepened with opposition leaders who want him to schedule new elections in exchange for considering legislation needed to fund the budget.
Japan’s new Economy Minister Seiji Maehara pledged a closer watch over the central bank to ensure it meets a 1 percent inflation goal, adding that purchases of foreign bonds may be a powerful tool for easing.