On Monday, After the results of the Japanese Senate election were announced, market sentiment took a 180-degree turn. The yen continued to hit a 24-year low and the Japanese stock market rebounded sharply.
As of press time, the exchange rate of the Japanese yen against the US dollar has fallen to around 137.05 yen per US dollar, the lowest level since 1998.
In the stock market, the Nikkei 225 and Japan's Topix both closed up more than 1%.
According to Xinhua News Agency reported on Monday, Japan's ruling alliance maintained a low advantage in the voting for the 26th House of Councilor election. Statistics show that among the 125 seats that were re-elected this time, the Liberal Democratic Party (LDP) in the ruling coalition won 63 seats, and the Komeito Party won 13 seats, far exceeding the "majority" target previously set. Including the 70 seats that have not been re-elected, the ruling coalition has 146 seats in the Senate.
This means that the Liberal Democratic Party led by the current Japanese Prime Minister Fumio Kishida won a resounding victory.
analysts said that investors interpreted the election results as a quasi-referendum on Japan's ultra-loose policies. Sony Financial Group analyst Juntaro Morimoto said: "The election results reflect public support for Prime Minister Fumio Kishida and make it clear that rising inflation in Japan is not as important to the public as it is overseas." "At Haruhiko Kuroda During his tenure, it will be easier for him to maintain the current loose monetary policy , a view that led to a sell-off in the yen as expectations for policy adjustments faded. ”
Bank of Japan Governor Haruhiko Kuroda reiterated on Monday that the Bank of Japan will not hesitate if needed. Increase monetary easing policy to boost the sluggish economy and stabilize the inflation rate at the 2% target level.
Haruhiko Kuroda has always been regarded by the market as the implementer and promoter of "Abenomics", advocating the implementation of ultra-easy monetary policy. The market believes that after the death of Shinzo Abe, Fumio Kishida will adjust "Abenomics", promote the appreciation of the yen and raise interest rates. As a result, the current easing policy may lose support, the stock market may fall, and the yen exchange rate is expected to appreciate slightly.
However, the results of the Senate election on Monday and the dovish speech of the central bank governor frustrated expectations of adjusting the easing policy, and investor sentiment reversed.
According to the media, Haruhiko Kuroda will end his term as governor of the central bank in April 2023. At that time, Fumio Kishida will appoint a new governor. The selection of the new governor will reflect whether Kishida's attitude towards monetary policy has changed.
In addition, the rise in U.S. bond yields and the strong non-farm payrolls report on Friday also further boosted the U.S. dollar, which rose against most major currencies.
As global central banks set off a wave of interest rate hikes, the Bank of Japan transformed into the "last samurai" and insisted on loose monetary policy and fixed interest rates at the lowest level. As the interest rate gap between the United States and Japan increases, the yen has fallen by more than 16% against the US dollar this year. The yen is just one step away from its worst ever decline, according to data compiled by and Bloomberg .
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