Yen's Downward Spiral: Impact of Upcoming Japanese Elections on Currency

The yen declined for the fourth consecutive day, driven by expected election outcomes supporting Prime Minister Sanae Takaichi's economic strategies. The anticipated extension of the ruling coalition's majority is adding to currency pressures. Meanwhile, the U.S. dollar remains stable amid potential policy shifts by the Federal Reserve.

The yen continued its decline on Wednesday, marking its fourth consecutive daily loss, as anticipation builds around parliamentary elections. The elections are expected to bolster Prime Minister Sanae Takaichi's policies focused on increased spending and defense enhancements, likely further weakening the currency.

In contrast, the U.S. dollar held steady against the euro and the pound, despite looming uncertainty over upcoming job data releases due to a partial government shutdown. The yen's recent performance saw it plummet by 0.68% to 156.80 per dollar, its weakest level since January 23.

Market strategists pointed to a weekend poll indicating the ruling coalition's potential parliamentary gain, which could intensify currency market volatility. A stronger electoral result for the government may necessitate firmer intervention to stabilize the yen, noted senior currency economist Lee Hardman.

(With inputs from agencies.)