Yen falls on fears for Koizumi government

Story link: Yen falls on fears for Koizumi government

The value of the yen declined again in relation to several major currencies on Thursday amid heightened concerns that the Koizumi government is close to collapse over the issue of post office privatization.

A vote on the issue in the upper house of the Japanese parliament that was scheduled for Friday has been put off until next week, raising speculation that Mr. Koizumi is having trouble marshalling support for the legislation, which has been given only a 50-50 chance of passing.

Mr. Koizumi has threatened to dissolve parliament and call new elections if the legislation is not approved. Fears are that political upheaval could damage Japan’s improving economy.

The yen lost 0.5 percent to ¥137.65 in relation to the euro, a 3-month low, and lost 0.3 percent to ¥85.96 against the Australian dollar, its lowest level in seven years.

In addition, the Japanese currency lost 0.2 percent to ¥197.89 in relation to sterling, but was close to unchanged against the US dollar at ¥111.14.

The US dollar was down by 0.5 percent to $1.2385 in relation to the euro, yet another 2-month low.

The greenback was also down against sterling, to $1.7804, and it declined to SFr1.2572 in relation to the Swiss franc.

The dollar had appeared to be strengthening on Thursday before a sell-off led to declines.

One analyst blamed the declines on technical factors, higher oil prices, and anticipation of payrolls figures from the Labor Department and next week’s meeting of the Federal Reserve.

Sterling lost 0.3 percent in relation to the euro, to £0.6955 as the Bank of England’s monetary policy committee cut UK interest rates a quarter of a point to 4.5 percent.