The Japanese yen fell below 153.5 per dollar on Monday, reaching its lowest level in nearly three months after the ruling coalition lost its parliamentary majority in the weekend election, which clouds the outlook for interest rate hikes by the Bank of Japan.
Yen hits 3-month low amid political uncertainty
The Liberal Democratic Party and its coalition partner, Komeito, experienced their most significant loss of seats in the lower house since 2009, raising political and economic uncertainties and complicating the central bank's normalization plans. Meanwhile, the BOJ is set to announce its monetary policy on Thursday, although it is expected to maintain the current policy.
Yen decline triggers verbal interventions as currency faces strong dollar pressure
The yen's decline prompted fresh verbal interventions from Japanese authorities last week, and a further drop toward the 160 level could raise the chances of another currency intervention. Additionally, the yen faces ongoing pressure from a strong dollar amid expectations of more cautious rate cuts by the Federal Reserve and speculation that Donald Trump could win in November.
