The yen goes back into retreat

The Japanese yen hit a two-and-a-half year low against the U.S. dollar today on news that Masaaki Shirakawa, the governor of the Bank of Japan, is stepping down from his post on March 19, a month early. That will give Prime Minister Shinzo Abe an earlier than expected chance to put a candidate committed to his strategy of weakening the yen in control of Japan’s central bank.

Japanese stocks fall again but politics points toward weaker yen

Remember that the new government of Prime Minister Shinzo Abe faces elections for the upper house of Parliament in July. Abe’s party, the Liberal Democrats, currently does not have a majority in the upper house (the House of Councillors) of the Diet. Abe very much wants to win a majority in the upper house because that would diminish the power of opposition parties to block his legislative program.