Japan’s ruling coalition, led by Prime Minister Shigeru Ishiba, has lost its majority in the upper house following Sunday’s election, according to public broadcaster NHK. The result further undermines Ishiba’s authority, which has already been weakened since his party lost control of the more powerful lower house in October — their worst performance in 15 years.
The Liberal Democratic Party (LDP) and its coalition partner Komeito fell short of the 50-seat threshold needed to maintain a majority in the 248-seat chamber, with only a few seats still undecided. Opposition parties gained ground, helped by promises of tax cuts, while a fringe anti-immigration party also made gains.
Though the upper house vote does not automatically bring down the government, the result increases pressure on Ishiba, especially with an August 1 deadline looming for US-imposed tariffs. Calls for a leadership change within the LDP are expected to grow.
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While the yen has been marked higher I expect volatility today after this knee jerk jump for JPY. Loss of upper house control raises policy uncertainty (normally yen supportive via safe-haven flows), but if it deepens fiscal/populist pressure for tax cuts or supplementary spending, the medium narrative can tilt mildly yen negative.
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This article was written by Eamonn Sheridan at investinglive.com.