The yen dropped in early Asia trading as Japanese markets braced for fresh volatility after Prime Minister Shigeru Ishiba announced over the weekend that he will step down.
The currency fell as much as 0.7% against the US dollar, wiping out Friday’s advance, while strategists said long-dated government bonds look vulnerable amid growing concerns over fiscal spending.
Ishiba’s resignation ends a tenure marred by bruising election results and leaves markets in limbo over Japan’s fiscal direction.
The departure is set to heighten investor uncertainty in the weeks ahead until a new leader emerges. US equity futures were little changed in early trading, while CME Nikkei futures were firmer.
“This is yet another reason why few want to own the yen at present,” Chris Weston, head of research at Pepperstone Group wrote in a note to clients. “Look for yen weakness in Asia to become broad-based.”
See also: Here’s who could replace Japan’s Ishiba as prime minister
Chart: Bloomberg
