Most Asian currencies traded quietly on Monday, heading into the week with little conviction as markets weighed Japan’s political shake-up and looming U.S. tariff deadlines.
The Japanese yen was the standout performer, gaining ground after Prime Minister Shigeru Ishiba’s Liberal Democratic Party and Komeito coalition lost their upper‐house majority in Sunday’s election. The USD/JPY pair slid 0.6%, pressured by:
Political uncertainty following the coalition’s drop from 50 seats to 47 in the 248‐seat chamber
Raised prospects of a near‐term Bank of Japan rate hike, as policymakers seek to stabilize an unpredictable trade and fiscal landscape
“This outcome could increase uncertainty regarding tariff talks with the U.S. and domestic fiscal policy,” noted ING analysts ahead of the vote.
Across the region, currencies remained largely subdued as investors focused on U.S. “reciprocal” tariffs set to take effect on August 1. Ongoing negotiations with key trading partners are seen as critical for:
Export‐driven economies like South Korea and Taiwan
Commodity currencies sensitive to global growth and trade flows
Markets will keenly track any breakthroughs ahead of the deadline, given the tariffs’ potential to reshape 2025’s growth outlook.
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