The Japanese yen rose more than 100 points against the US dollar after opening higher at 147.90 at the opening of the weekly markets on Monday, July 21. This was affected by the government and ruling coalition losing their upper house majority in Sunday’s elections, which increased investor anxiety and tension regarding the Bank of Japan’s political and financial outlook, especially as the deadline for tariff negotiations approaches.
These gains in the Japanese market come despite the official holiday in Japanese markets for Navy Day on Monday. Prime Minister Shinzo Abe’s Liberal Democratic Party won 47 seats in the upper house, less than the 50 seats needed to secure a majority. This is the second defeat for the prime minister’s party, which lost its majority in the lower house last October, while opposition parties made gains with promises of tax cuts. Political uncertainty in the world’s third-largest economy has increased with this outcome, especially as the August 1 deadline for the implementation of tariffs from the United States approaches. Prime Minister Ishiba stated that he accepts this harsh outcome, adding that they are currently engaged in extremely sensitive tariff negotiations that must not fail under any circumstances.
The Japanese yen is currently moving as one of the most important safe-haven currencies, benefiting from the increased political uncertainty and its impact on the Bank of Japan’s decisions. However, movements could turn negative with any promises to cut taxes and increase spending.