TOKYO, June 2. The Japanese yen fell against the U.S. dollar and the euro during the Asian session on Wednesday. Short-term market participants sold the Japanese currency after the announcement of the Prime Minister of Japan, Yukio Hatoyama of the resignation, which reduced the attractiveness of the yen as an asset-seekers.
As at 06.50 GMT couple dollar / yen in the interbank market was trading at 91,48-49, euro / dollar - on 1,2211-13, the euro / yen - on 111,71-76, a pair of British pound / dollar - by 1,4708-14, a couple of dollar / Swiss franc - on 1,1571-76.
A pair dollar / yen rose to a two-week maximum of 91.78, after the reported resignation Hatoyama resigned. According to analysts, the pair dollar / yen may rise to 93.00 before the weekend, thanks in part may contribute to conversations about the political changes in Japan, which may mean less tolerance of the authorities to strengthen the yen.
Statement Hatoyama's resignation came only a few weeks before the scheduled July 11 elections to the upper house of parliament in Japan. Thus, the ruling Democratic Party of Japan is necessary to choose a new leader and cabinet. Uncertainty as to how these changes may affect the Japanese currency and economic policy in the country, led market participants to reduce their positions on the yen, dealers said.
The current Minister of Finance of Japan, Naoto Kan, which is supposed to be the most likely successor Hatoyama, made it clear that he welcomed a weaker yen dynamics. Similar dynamics will support key to Japan's export sector. According to the Secretary General of the Democratic Party of Japan Ichiro Ozawa, who also said that leaving his post, the election of new party leader on Friday.
"If Khan becomes prime minister, it can provide more substantial support for the pair dollar / yen," - said Satoshi Okagava, senior currency trader at Sumitomo Mitsui Banking. In this case the pair dollar / yen is likely to continue to bargain above the psychologically important mark of the key 90,00, notes Okagava.
This is due to the fact that the government under the leadership of Kana can make market participants more sensitive to the threat of verbal and, perhaps, the real currency intervention aimed at curbing the strengthening yen. Since taking office in January, Finance Minister Kang said that he wanted to "some easing" the Japanese currency. He also took the unusual step, indicating a certain level. For example, Kahn said that many Japanese companies are hoping that the pair dollar / yen will be charged in the area 95.
Public support for the Democratic Party of Japan is weakening. According to analysts, this situation indicates that even in the case of increasing the rating of the Party in connection with the change of leader she is likely to lose the current small advantage after the elections to the upper house of Japan. Exit at the weekend of the Social Democratic Party of Japan from the ruling bloc means that the government can not even count on the informal support from this former member of the coalition.
"Even after the new cabinet will be formed, the uncertainty about the election results will have a negative impact on the yen," - said Masafumi Yamamato, chief currency strategist at Barclays Capital in Japan.
The uncertainty is for the yen is even more significant threat in the medium term, as Kahn says Yamamoto. "Kahn, of course, prefer a lower yen," but in the absence of a sharp fall in stock price "Keidanren / Japan Business Federation / lobbyists and other business groups have not actively sought for the Government to take measures to strengthen against the yen," said Yamamoto.
However, dealers noted that political instability in Japan, most likely, will not lead to a sharp drop in the yen. The negative impact on the Japanese currency would be limited as market participants previously had begun to take account of quotations political uncertainty in the country and the ability to care Hatoyama resigned, said Yuzo Sakai, manager of currency units in the Forex & Ueda Harlow.
Euro lost won earlier position, as investors sold the single European currency in growth accompanied by persistent fears about the spread of debt problems in the eurozone. In the euro also affected by political uncertainty in most euro area, after President key to the region of Germany Horst Koehler on Monday resigned from his post.