TOKYO — The yen slid on Thursday as concerns mounted over a pivotal election in Japan and a still elusive trade deal with the US to avoid a punishing rise in tariffs.
Japan’s currency traded near a one-year low against the euro as polls showed Prime Minister Shigeru Ishiba’s coalition was in danger of losing its majority in the upper house. The US dollar staged a meagre recovery after US President Donald Trump denied he was planning to fire Federal Reserve Chair Jerome Powell.
Japan’s top trade negotiator held a phone call with US Commerce Secretary Howard Lutnick on tariffs, as data showed the Asian nation’s exports were starting to feel the impact of tariffs with shipments down for a second straight month.
“With the elections, the tariffs, the overall relationship between Japan and the US, I do think there is some reason to sell the yen,” said Bart Wakabayashi, Tokyo branch manager at State Street. “The election seems to be a key point in the foreign view of the currency at the moment.”
Investors remain focused on tariffs ahead of an August 1 deadline when many trading partners face higher trade levies. Japan failed to clinch a deal with the US before the July 9 expiration of the temporary pause on the country-specific tariffs.
Overseas shipments from the world’s fourth-largest economy dropped 0.5 percent in June year-on-year in value terms, data showed on Thursday.
The nation’s chief trade negotiator Ryosei Akazawa held a 45-minute phone call with Lutnick following comments by Trump that the US would likely keep 25 percent tariffs on Japan unless the countries agree on a trade deal.
