The yen declined to its lowest level in three months against the U.S. dollar on Monday, following Japan’s ruling coalition’s election loss, which has increased uncertainty around the country’s political and monetary policies. Meanwhile, the U.S. dollar is on track for its biggest monthly gain since April 2022.
Rising by as much as 1%, the U.S. dollar reached 153.88 yen, the lowest record for the yen since July. Trading at 153.34, the yen had dropped 0.7% at the conclusion of the day. Among G10 currencies, this represents a 6.4% fall in October, the worst reduction.
Not meeting the 233 required for a majority, Japan’s Liberal Democratic Party and junior partner Komeito obtained 215 members in the lower chamber. This result is projected to cause protracted discussions to create a coalition government, therefore compromising political stability.
Meanwhile, supported by indications of U.S. economic strength, the dollar is likely to conclude October with its highest monthly advance in two and a half years. Tracking the dollar against a basket of foreign currencies, the U.S. Dollar Index surged 3.6% in October to 104.46, its highest monthly increase since April 2022. It dropped somewhat, 0.07% to 104.31 at Monday’s closing.
U.S. Treasury rates have also been pushed higher by bets on a Republican sweep in the next U.S. elections, which might cause policies postponing interest rate decreases.
Though it is still down about 3% for the month, the euro climbed 0.15% to $1.0813, hampered by worries about possible European Central Bank rate cuts and the likelihood of retaliation tariffs should the United States implement a worldwide baseline tax.
