USD/JPY approaches ¥160 after news of possible dissolution of Japan’s House of Representatives

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【Financial News Tokyo = Correspondent Seo Hye-jin】On July 14, the USD/JPY exchange rate climbed into the ¥159 range per dollar on concerns over fiscal instability stemming from the possibility that the House of Representatives of Japan may be dissolved.
\r\nAs of 2:00 p.m. in the Tokyo foreign exchange market, the USD/JPY exchange rate stood at ¥159.19–159.20 per dollar, up ¥0.26 from the previous close, meaning the yen weakened. At around 10:30 a.m., it had risen as high as ¥159.45 per dollar, marking its weakest level in about a year and a half since July 2024.
\r\nAs expectations grew that Sanae Takaichi, Prime Minister of Japan, will dissolve the House of Representatives of Japan early, concerns over aggressive fiscal policy resurfaced, triggering renewed selling of yen and buying of dollars.
\r\nHowever, caution over potential intervention by the Government of Japan in the foreign exchange market has provided support for the yen and limited further declines. Among investors who had sold yen earlier in the morning, some buying of yen to close positions also emerged.
The yen strengthened slightly against the euro. As of noon, the yen–euro exchange rate stood at ¥185.35–185.38 per euro, down ¥0.03 from the previous close, meaning the yen appreciated. In line with selling of the euro against the dollar, there was buying of yen and selling of euros.
\r\nMeanwhile, the stock market extended the previous day’s gains on expectations that, if Takaichi wins an early general election following the dissolution of the House of Representatives of Japan, fiscal expansion policies will accelerate.
\r\nIn the Tokyo stock market, Japan’s benchmark Nikkei 225 closed the morning session at 54,413, up 1.61% from the previous trading day. In the afternoon session, it pared some gains, hovering around the 54,200 level.
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sjmary@fnnews.com Seo Hye-jin Reporter