Yen advances broadly; dollar falls
Japanese markets were closed for a public holiday, leaving the yen as the main indicator of possible investor angst.
In midmorning trading, the Japanese currency gained 0.9% to 147.52 per dollar, although not far off from the 3-1/2-month low of 149.19 hit last week as investors fretted about Japan's political and fiscal outlook. It also nudged 0.5% higher against the euro to 172.05 and against sterling to 198.60, up 0.4%.
Prime Minister Shigeru Ishiba's Liberal Democratic Party returned 47 seats, short of the 50 it needed to ensure a majority in Japan's 248-seat upper chamber, where half the seats were up for grabs.
Ishiba vowed to stay on in his role even as some of his own party discussed his future and the opposition weighed a no-confidence motion.
'Since Tokyo markets were closed for Marine day today, we have to see what happens tomorrow: how the markets respond,' said Marc Chandler, chief market strategist, at Bannockburn Forex in New York.
'I know some people are saying that with the LDP party losing its majority, this could mean a shift in policy, but I don't see it. I think people were just caught leading the wrong way on dollar/yen thinking that the election outcome was going to be a negative for the yen.'
The election result, while not entirely a shock to markets, also comes at a tricky time for a country trying to get a tariff deal with US President Donald Trump before an August 1 deadline. 'Japan's political picture has become more complicated, with investors also focusing on the US-Japan tariff row,' said Roberto Mialich, global FX strategist at UniCredit.
The increased political fragility is likely to constrain the Bank of Japan's ability to tighten monetary policy in the near term, said David Chao, global market strategist for Asia Pacific at Invesco. 'It may be reluctant to add further pressure to an already volatile landscape.'
The euro was up 0.4% at $1.1681, while sterling last fetched $1.3488, up 0.6%. The dollar index, which measures the US currency against six others, was down 0.5% at 97.969.
The European Central Bank is due to meet this week and is expected to hold rates steady after a string of cuts, while investor attention has been on whether the Federal Reserve succumbs to pressure from Trump to cut interest rates.
'We doubt ECB President Christine Lagarde will shake things up too much ahead of the central bank's summer break, although there may be some continued concerns over recent euro strength and particularly the direction of tariffs,' said Chris Turner, ING's global head of markets.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
an hour ago
- Express Tribune
Afghans scramble for chance to work in Qatar
When Mohammad Hanif heard Qatar was opening jobs to Afghans, he joined thousands of others to put his name down for a shot to make a living in the gas-rich emirate, his own country wracked by unemployment. The Taliban authorities announced a deal with Gulf state this month to recruit 3,100 workers from Afghanistan, who started applying on Tuesday at centres across the country. By Wednesday, more than 8,500 people had put their names down from the capital Kabul and surrounding provinces, labour ministry spokesman Samiullah Ibrahimi told AFP, and more than 15,500 people are expected to register nationwide. The Taliban government says the jobs will help fight steep unemployment and poverty in the country of around 48 million people, facing what the United Nations says is one of the world's worst humanitarian crises. "Our country has many problems, most people are poor and work odd jobs," said Hanif, who travelled to western Herat from neighbouring Badghis to register. "I have skills in car mechanics and cooking, and I have certificates to prove it," said the 35-year-old, adding he was grateful to Qatar for employing Afghans. Competition is steep, however, with centres swarmed by hopeful applicants ready to present the required passports, identification cards and professional certificates to nab roles ranging from bus driver to cleaner, cook, mechanic and electrician. More than 1,000 people have applied in southern Kandahar for around 375 positions allocated to the region, and in Herat, around 2,000 people lined up on Wednesday to try for one of a few hundred jobs, AFP journalists said. Qatar, where the Taliban opened an office during the two-decade war with US-led forces, is one of the handful of countries to have strong diplomatic ties with Afghanistan's rulers after they swept to power in 2021. Only Russia has so far officially recognised the Taliban government. Discussions are also underway with Saudi Arabia, the United Arab Emirates, Oman, Turkey and Russia to set up similar deals, labour minister Abdul Manan Omari said in a statement on Tuesday. The process "will undoubtedly have a positive impact on the country's economic situation and reduce unemployment", said Abdul Ghani Baradar, the deputy prime minister for economic affairs.
Express Tribune
2 hours ago
- Express Tribune
Govt euphoric over US trade deal, but keeps terms under wraps
Finance Minister Muhammad Aurangzeb meets with US Secretary of Commerce Howard Lutnick during his visit to Washington. Photo: APP Listen to article As the government is tightlipped on the fine points of the US-Pakistan trade deal, background discussions suggest Washington might have gained market access at zero tariffs in return for investing in critical sectors and giving Islamabad favourable treatment compared to regional peers. Field Marshal Asim Munir's meeting with President Donald Trump and Pakistani negotiators' positive approach towards resolution of the issue before the August 1 deadline played a role in securing a better and early deal. Tariffs on Pakistani exports will be lower than regional competitors from South Asia and Southeast Asia, mainly India, Vietnam and Indonesia. Pakistan's chief negotiator, Finance Minister Muhammad Aurangzeb, termed it a "real win-win deal" for both the countries, which has protected Pakistani exports from retaliatory higher tariffs. But the final tariffs might be higher than the pre-retaliatory tariffs of around 9.8%. The US may now export goods to Pakistan at virtually zero rates but the effective date of the zero tariffs may be from July 2026 due to needed legislative changes, said the Pakistani authorities on condition of anonymity. No tariffs on US goods will be in the benefit of consumers who will have quality goods but still their prices might be more than Made-in-China goods. In return, the US tariffs on Pakistan will be lower than 29%, which President Donald Trump announced in April compared to the average 9.8% prevailing rates at that time. Aurangzeb said that the US will also invest "first in energy, then in minerals, mines, information technology, digital infrastructure and new economy". People privy to multiple rounds of trade discussions said on Thursday that the United States had set two key demands for a trade deal with Pakistan: lower tariffs on its exports to Pakistan to zero with total access to markets; and exemption to its companies from 5% tax imposed under the Digital Presence Proceeds Act 2025. Hours before President Donald Trump's announcement that his administration reached a deal with Pakistan, the Federal Board of Revenue issued a notification to withdraw the 5% tax. Commerce Secretary Jawad Paul, who was part of the negotiating team, did not comment whether Pakistan accepted the US demand for zero tariffs with complete market access. There was no formal announcement from either side on what tariff rate was agreed upon, but the Pakistani embassy in Washington said the agreement "will result in the reduction of reciprocal tariff (29%) especially on Pakistani exports to the United States". The deal was reached during a meeting of Aurangzeb, US Secretary of Commerce Howard Lutnick, and US Trade Representative Ambassador Jamieson Greer. Commerce Secretary Jawad Paul and Pakistan's Ambassador to the US Rizwan Saeed Sheikh were also present during the meeting. The sources said that Pakistan had expected that in return the US would set import tariffs in the range of 15% to 19%, preferably close to 15%, which is lower than the retaliatory rate but higher than the pre-April rates. Till the filing of the story no announcement was made either by the US or the Pakistani government about the final tariff for Pakistan. Pakistan also sought concessions for export of its agriculture products, said the sources. One thing was clear that Pakistan will not be at a disadvantageous position compared to regional countries due to its constructive approach in dealing with the issue, said another government official. One of the issues might be any concerns being shown by Pakistan's other trading partners. To deal with the matter, there is a possibility that both sides show intentions to sign preferential trade agreement or a free trade agreement, said the sources. President Donald Trump also talked about exploring Pakistan's oil reserves with US companies. A Petroleum Division official said that there was a possibility that any US company can participate in the upcoming offshore drilling. The Express Tribune reported last week that the Petroleum Division was seeking bids from interested investors to grant rights for drilling on offshore well and it would open the bids on October 31, 2025. The report further stated that earlier Oil and Gas Development Company Limited (OGDCL) and Pakistan Petroleum Limited (PPL) struggled to find hydrocarbon reserves in an offshore zone in Arabian Sea in association with US energy giant ExxonMobil and Italian firm Eni. Pakistan has made 17 attempts to make offshore drilling but they did not yield the desired results. "From our perspective, it was always going beyond the immediate trade imperative. The whole point of this is that trade and investment have to go hand-in-hand," the finance minister said after reaching the deal with the US. "The role of the private sector is prominent, because when we were trying to figure out how to reduce or end the trade imbalance, the private sector was the first constituent who came up and said they will help," Aurangzeb said. In the last fiscal year, Pakistan exported $6 billion worth of goods to the US compared to $2.4 billion imports, earning a surplus of $3.7 billion, a source of concern for President Donald Trump.
Business Recorder
3 hours ago
- Business Recorder
Japan rubber futures slide on profit taking
SINGAPORE: Japanese rubber futures fell across all exchanges on Thursday as traders booked profits after last week's rally, while fresh US tariffs on South Korean autos and weak manufacturing data weighed. The Osaka Exchange (OSE) rubber contract for January delivery was down 7.2 yen, or 2.23%, at 315.5 yen ($2.12) per kg. The rubber contract on the Shanghai Futures Exchange (SHFE) for September delivery fell 435 yuan, or 2.9%, to 14,560 yuan ($2,024.64) per metric ton. The most active September butadiene rubber contract on the SHFE dipped 340 yuan, or 2.87%, to 11,495 yuan ($1,598.44) per metric ton. In the latest round of US tariffs announced by US President Donald Trump, South Korean automobile exports will face a 15% tariff. Although this rate is lower than the 25% tariff threatened in April, South Korea previously enjoyed zero tariffs on its automobile exports to the US, whereas Japanese automakers had a 2.5% tariff. Automobile sales could influence the intensity of automobile manufacturing, which involves using rubber-made tyres.
