Tokyo assembly elections a bellwether for Upper House vote
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Asahi Shimbun
21 minutes ago
- Asahi Shimbun
Yen takes Japan election in stride even as uncertainty beckons
Shigeru Ishiba, Japan's prime minister and president of the ruling Liberal Democratic Party (LDP), listens to a question from a journalist at the LDP headquarters, on the day of Upper House election, in Tokyo on July 20. (Pool via REUTERS/File Photo) SINGAPORE--The yen firmed on Monday after Japan's ruling coalition lost its majority in the Upper House as investors braced for a period of policy paralysis and market disquiet in the world's fourth-largest economy ahead of a deadline on U.S. tariff negotiations. The Japanese markets are closed for the day leaving the yen as an indicator of investor angst, with trading so far suggesting the results were mostly priced. The yen firmed to 148.44 per dollar, but stayed close to the 3-1/2-month low it hit last week as investors fretted about Japan's political and fiscal outlook. The yen nudged higher against the euro to 172.64 and against sterling to 199.03. Prime Minister Shigeru Ishiba's Liberal Democratic Party returned 47 seats, short of the 50 seats it needed to ensure a majority in the 248-seat upper chamber in an election where half the seats were up for grabs. While the ballot does not directly determine whether Ishiba's administration will fall, it heaps political pressure on the embattled leader who also lost control of the more powerful Lower House in October. Carol Kong, currency strategist at Commonwealth Bank of Australia, said markets likely priced in a much worse outcome for the ruling coalition heading into the election and doubted that the yen could sustain its strength. "It remains unclear whether Ishiba can indeed survive as the prime minister... and what it means for Japan's trade negotiations with the U.S. Prolonged political uncertainty will be negative for Japanese assets, including 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 U.S. President Donald Trump before an Aug. 1 deadline. Japanese government bonds plunged last week, sending yields on 30-year debt to an all-time high, while the yen slid to multi-month lows against the U.S. dollar and the euro. If Ishiba resigns, the political maelstrom could be a trigger for foreign investors to sell Japanese shares and the yen, analysts said. Ishiba though 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. 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 (BOJ) may be reluctant to add further pressure to an already volatile landscape." TARIFF UNCERTAINTY Investor focus has been firmly on Trump's global tariff salvos, with a Financial Times report last week indicating the U.S. president was pushing for steep new tariffs on European Union products. U.S. Commerce Secretary Howard Lutnick said on Sunday he was confident the U.S. can secure a trade deal with the European Union, but said August 1 was a hard deadline for tariffs to kick in. The euro was steady at $1.16317, while sterling last fetched $1.13417. The dollar index, which measures the U.S. currency against six others, was at 98.381. The European Central Bank is due to meet this week and is expected to hold its 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. Trump appeared near the point of trying to fire Fed Chair Jerome Powell last week, but backed off with a nod to the market disruption that would likely follow. The U.S. central bank is widely expected to hold rates steady in its July meeting. Traders are pricing in a rate cut in October with the odds of a second rate cut this year not fully priced in yet. The New Zealand dollar eased 0.18% to $0.5951 after consumer inflation accelerated in the second quarter but stayed below economists' forecasts, leading markets to raise the chance of a rate cut next month given the broader economic weakness. In cryptocurrencies, bitcoin was 0.18% higher at $118,338, holding below a record $123,153 reached last week.
The Mainichi
21 minutes ago
- The Mainichi
After Japan election reflects popular will, it's time to seek politics that shares hope
Diverse popular opinion at times offers a certain direction through the lens of an election. In the latest House of Councillors poll, where the ruling coalition of the Liberal Democratic Party (LDP) and Komeito lost a significant number of seats, an end to a political system premised on the "LDP hegemony" is brought to mind. One of the key issues in the race was high prices. There were no signs of people's slide into poorer circumstances abating. The question was what prescriptions were on offer. Opposition parties called for a consumption tax reduction. This does not seem an efficacious remedy for the Japanese economy, though it could alleviate frustrations. Furthermore, it raises concerns over side effects such as increases in deficit-covering government bonds and cuts in social security spending. The LDP, on the other hand, promised cash handouts to all residents. This also raises fiscal resource questions. Yet the LDP has the Ministry of Finance on its side. The selling point was that the handouts could get to people quickly. If the race was to be a pork-barreling contest, it was considered that the ruling bloc would have an edge, but the opposition camp was declared the victor. Behind this apparently lie strong frustrations toward the LDP as a political group that transcend the pros and cons of its policies. After campaigning for the upper house election officially got underway, the LDP was increasingly put on the backfoot. This made me feel the party's waning presence as a voting target. The LDP stayed in power by meticulously accommodating the requests of interest groups and local communities. Post-Cold War, the party, facing significant demands from abroad, could no longer retain its single-party rule. Yet it has since mostly maintained its hegemony by shifting its coalition partners at times. The LDP was a party whose mission lay in keeping its ruling party status. After the party stabilized its organization, institutionalization progressed and futile internal conflicts decreased. This gave rise to the party's system to distribute key positions to figures in mainstream internal factions. On the other hand, the party grew increasingly rigid. This became evident in the LDP slush fund scandal involving faction fundraising parties. While being aware of public sentiment over politicians engaging in extremely unfair activities, the party prioritized maintaining internal order, turning its back on efforts to get to the bottom of the problem. The LDP also postponed a review of corporate and organizational donations to political parties. Organizations cannot survive unless they transform themselves. The reason why Prime Minister Shigeru Ishiba's administration could remain in power despite low approval ratings was because, as some pointed out, "there were no alternatives." It appears the party is experiencing an organizational apoptosis. The other side of the coin from the LDP's loss of hegemonic ability was the seat growth of opposition party Sanseito. Japanese politics, clad in a robe of instability, is ushering in a new era. What is required in pursuing the form of politics are visions for the future. The power to create the future does not lie in populism inciting anxiety. Now is the time to seek politics that shares hope. (Japanese original by Hirotomo Maeda, Executive Editor)
Japan Times
21 minutes ago
- Japan Times
Ishiba clings to leadership after election setback
'Responsibility' has been the theme of Prime Minister Shigeru Ishiba's 17 days on the campaign trail. Now, after an election where his ruling Liberal Democratic Party-Komeito coalition lost its majority in the Upper House by a thin margin, it has become an ostensible reason for him to cling to his leadership — at least, for the moment. 'As the first party in parliament, we have to fulfill our responsibility with the public so as to prevent politics from stagnating or drifting away,' Ishiba told a news conference he held as LDP leader Monday afternoon. Citing ongoing negotiations with the United States over the 25% 'reciprocal' tariffs imposed by the administration of President Donald Trump and the complex economic and security outlook, Ishiba told reporters he has no intention of stepping down. However, in the wake of another setback after last October's debacle in the Lower House election, his political capital has plunged. In the Upper House election, the LDP failed to reverse the momentum of mounting headwinds anticipated by the poor showing in June's Tokyo Metropolitan Assembly poll. Throughout the campaign, the LDP tried to play the part of the 'responsible party,' portraying itself as the only force able to steer the country out of the troubled waters it finds itself in. Depicting the opposition as a cluster of irresponsible forces who can't be trusted with the helm of the country, the LDP attempted to appeal to the electorate with its alleged experience and sound judgment. The party's recipe for the future, though, failed to resonate with a public vexed by the soaring cost of living and tired of over a decade of LDP leadership. The insistence shown in protecting the country's coffers and defending the consumption tax 'to the end' — in the words of LDP Secretary-General Hiroshi Moriyama — backfired at the polls, as did the promise of ¥20,000 cash handouts. As shown in the resounding victories achieved by the Democratic Party for the People and Sanseito , especially in urban districts, the LDP faded in comparison to the expansionist menus presented by the opposition. The election debate largely stayed inward-oriented, with voters showing little interest in topics such as security and the ongoing tariff negotiations. Ishiba's attacks on the alleged 'irresponsibility' of a fragmented opposition largely fell on deaf ears. On the defining issue of the campaign — policies related to the foreign community — the LDP was forced to adapt to an agenda defined by opposition parties. All in all, the party couldn't escape the fate that often awaits incumbents in times of burgeoning dissatisfaction with the status quo. Ishiba's own track record ended up exacerbating that dissatisfaction. In his nine months in office, Ishiba — who seemed to have plenty of plans for the country when he reached the party leadership — proved unable to leave his own distinctive mark on the role. Perhaps surprisingly, the party showed its trademark pragmatism to successfully navigate an insidious session of parliament — clinching ad-hoc deals with the opposition in exchange for policy concessions. However, that laborious process left the party anemic, unable to reboot and rehabilitate its standing after last year's Lower House defeat. Handicapped from the start of his mandate and lacking a strong power base within the party, Ishiba could do little to change the course of the election. For a moment, the popular Shinjiro Koizumi's appointment as agricultural minister in late May seemed to have turned the tables and given Ishiba some breathing room. That too, however, proved short-lived. After voters signaled their frustration toward the current administration at the polls, the ball is now in the LDP's court. The next few weeks will be crucial to determine the future of the administration — and potentially of the composition of the coalition. The thin margin of the coalition's defeat — the coalition is only three seats short of the 125 needed for a majority — leaves potential room for maneuvering in the Upper Chamber. On top of that, the Aug. 1 deadline on tariff negotiations might grant the prime minister some breathing room, allowing him to stay on in the name of continuity and the need to avoid a political vacuum at a sensitive time for the nation. The weakened state of party factions means that, even if internal maneuvers to oust Ishiba were to occur, the old playbook may no longer apply. That being said, in one way or the other, Ishiba will be forced to take 'responsibility' for the party's underperformance in the poll. Although last year's Lower House defeat took place only weeks into his mandate, this time the prime minister has fewer excuses, particularly given the impasse on tariffs. Reports say the party will soon call a plenary meeting with members of both the Lower and Upper House. Lawmakers long critical of Ishiba will have a chance to vent their frustrations and potentially coalesce. While he denied any enlargement of the coalition at this stage, he voiced his intention to create a framework for policy cooperation with the opposition. 'We will hold sincere discussions with opposition parties on policy issues of particular urgency,' Ishiba said. He also added he hasn't made up his mind on a potential reshuffle of his government or the party leadership. So far, all the potential interlocutors — namely the DPP and Nippon Ishin no Kai — have ruled out the possibility. DPP leader Yuichiro Tamaki said his party will watch the coming developments within the LDP before making the next move. Should Ishiba step down, the party will enter a new phase of instability, and it's unclear whether a new leader could gain the trust of fellow lawmakers. Last September's presidential election showed there's no shortage of aspiring leaders, starting with Koizumi. It took Ishiba — famously the lone wolf, popular with the public but with few friends in the party — five attempts to attain the long-yearned party leadership. He won't go down that easily. 'The road ahead will be thorny,' Ishiba admitted. 'But we will deepen discussions with other parties and run the country with a sincere heart.'
