Yen firms on increasing political certainty
2024-11-12
Summary:
Despite PM Shigeru Ishiba's coalition losing its majority in last month's election, the yen steadied after his re-election.
The yen steadied on Tuesday after Japanese lawmakers voted for PM Shigeru Ishiba to stay on as leader earlier. His coalition lost its parliamentary majority in a lower house election last month.
Some Japanese officials fear Trump might again hit Tokyo. His policies could have a significant impact on Japanese carmakers with large exposures to the US market.
Many of those companies have set up manufacturing bases in Mexico and export their cars to the US from there. Trump has announced that all vehicles manufactured in Mexico will have a 200% tariff imposed on them.
Slightly more than half of Japanese firms are looking to raise wages by 3% or more for the next business year, a Reuters survey showed, which is seen as necessary for the BOJ to raise interest rates gradually.
But they baulked at PM Shigeru Ishiba's quest to hike minimum pay by over 40% in five years. Uncertainty around US-Japan trading relation and signs of economic woes will add to concerns.
Japan's service-sector sentiment worsened and bankruptcy cases rose in October, data showed, casting doubt on the view the country was on track to meet its 2% inflation target driven by robust demand.
The greenback still traded above 200 SMA against the yen, suggesting the rally have more to go. It needs to clear the hurdle at 160 to retest the all-time peak hit in 1986.
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