August 31, 2009

Yen gets post-election boost

The Japanese yen reached a seven-week high against the dollar Monday, as investors reacted to a shift in political power, a market strategist said.

If the Democratic Party of Japan's rise to power also heralds a more active reserve management strategy "¦ (the) dollar/yen would come under pressure as the country is one of the world's biggest holders of the dollar debt, Geoffrey Yu at UBS told the Financial Times.

The Nikkei 225 average in Tokyo spiked early Monday after Sunday's election switched power to the DPJ, which won 308 seats in the Lower House, the first party to win more than 300 seats in an election since before World War II.

The spike didn't last. The Nikkei average closed 0.4 percent lower, as the yen escalated against other currencies.

The yen gained 0.7 percent against the dollar by midday in New York, recently trading at 92.96 yen to the dollar. It gained 0.8 percent against the British pound and 0.5 percent against the euro.