logo
Yen firms as investors gird for political uncertainty

Yen firms as investors gird for political uncertainty

Reutersa day ago
SINGAPORE, July 21 (Reuters) - 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 tumult in the world's fourth-largest economy ahead of a deadline on tariff negotiations with the U.S.
The Japanese markets are closed for the day leaving the yen as an indicator of investor angst. 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.
The yen firmed to 148.32 per dollar in early trading, staying close to the 3-1/2-month low it hit last week as the election result was mostly priced in by investors. It firmed a bit against the euro to 172.64.
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.
Chris Weston, head of research at Pepperstone, said the LDP coalition could still partner with the Democratic Party for the People (DPP) to get the 50 seats required, and "that is helpful for the yen."
"However, most importantly, PM Ishiba has been defiant in his stance to stay the course as PM, but his hand has been sufficiently weakened."
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 (JGBs) 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.
Elsewhere, 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.
The euro was steady at $1.163225 in early trading, while sterling last fetched $1.13417. The dollar index , which measures the U.S. currency against six others, was at 98.352.
The New Zealand dollar eased 0.18% to $0.5951 after annual 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 fell 1% to $116,939, holding below a record $123,153 reached last week.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Indian women's labour participation decades away from matching G20 peers, economists say: Reuters poll
Indian women's labour participation decades away from matching G20 peers, economists say: Reuters poll

Reuters

time20 minutes ago

  • Reuters

Indian women's labour participation decades away from matching G20 peers, economists say: Reuters poll

BENGALURU, July 22 (Reuters) - Indian women's participation in the workforce will take at least two decades to catch up with G20 peers, according to a Reuters poll of economists and policy experts, many of whom said they believed poorly-paid self-employment is inflating an already-low rate. Overall job creation is falling short of the needs of India's mostly young, rapidly-growing working-age population. Women, who make up half of that pool, are largely absent from the workforce and most women with jobs are not formally employed on payrolls. The official female labour force participation rate (FLFPR) rose to 31.7% from 27.8% in the latest 2023-24 Periodic Labour Force Survey, opens new tab (PLFS), but is well short of Prime Minister Narendra Modi's 2047 development goal, opens new tab to raise it to 70%, putting it more in line with advanced economies. India is at the bottom of the G20 table, behind Saudi Arabia and Turkey, and lower than even neighbouring Bangladesh and Bhutan, according to World Bank data. The G20 average is around 50%. A majority, 80%, of top independent economists and policy experts surveyed over the past month, 32 of 40, said it would take at least 20 to 30 years for India to reach a rate comparable to other G20 economies, including 18 who said it would take more than three decades. The remaining eight said it would take 10-20 years. "The kind of work women are involved in is not really what we call good jobs or good quality work. It's really just bottom of the ladder, survivalist kind. It's good they're participating but it's not the kind of transformational participation you might imagine," said Ashwini Deshpande, a professor and head of the department of economics at Ashoka University. "The job crisis is much more acute than in countries with similar levels of when jobs are scarce, men get the first priority everywhere," added Deshpande. Only 15.9% of working women, opens new tab are in regular wage or salaried jobs, the kind that come with contracts, steady pay or benefits. While officials have noted the recent rise in female labour force participation as a sign of progress, the latest PLFS survey showed 73.5% of rural working women and over 40% with jobs in urban areas are self-employed. Asked what they make of the official data over 70% of economists surveyed, 32 of 43, said it masked the real picture. " should see household earnings also go up when women are participating and that has not happened, which is a very big marker that this is potentially not the best kind of employment. It's potentially distress-driven," said Rosa Abraham, assistant professor at Azim Premji University. Asked if the recent rise in FLFPR signals real progress, she said: "That level of shift is still nowhere near what you would expect at this level of economic development that we are in and there's still a long way to go." Over 70% of experts said the Indian government's overall unemployment data was inaccurate and masked the severity of joblessness and underemployment. Even when jobs are available, safety concerns and unpaid care work prevent many women from applying. They spend nearly five hours daily on household duties, over three times as much as men, according to the 2025 Time Use Survey, opens new tab. "For women the productive and reproductive age coincide. Hence childcare and lack of suitable facilities serve as a constraint," said Sangeeta Shroff, former professor at the Gokhale Institute of Politics and Economics. "To address such issues, it will require aggressive policy intervention which will require considerable time and resources." Asked what the government should prioritise, respondents highlighted expanding childcare, safer workplaces and stronger anti-discrimination measures. Bina Agarwal, professor of development economics and environment at the University of Manchester, said young women need safe hostels in cities and small towns, safe transport to work and enforcement of workplace sexual harassment laws. "These are among many ideas feminist economists in India have been advocating for years. Is anyone listening?" she asked.

Official India jobless data is not accurate, say top independent economists: Reuters poll
Official India jobless data is not accurate, say top independent economists: Reuters poll

Reuters

time20 minutes ago

  • Reuters

Official India jobless data is not accurate, say top independent economists: Reuters poll

BENGALURU, July 22 (Reuters) - The Indian government's unemployment data is inaccurate and masks the severity of joblessness and underemployment, according to a Reuters poll of independent economists, several of whom said the true jobless rate is around twice the official figure. India is the world's fastest-growing major economy at an annual rate of 7.4% in the January-March quarter, but so far growth has failed to create enough well-paying jobs for the millions of young people entering the workforce each year. Prime Minister Narendra Modi's government is now more than one year into a third term after losing a commanding majority, partly blamed on discontent among youth over their future prospects. Over 70% of independent economists polled over the last month, 37 of 50, said the official unemployment rate, at 5.6% in June, is inaccurate. In a Reuters survey last year most economists flagged chronic joblessness as the government's biggest challenge. Experts say outdated definitions of what constitutes a job in a country of more than 1.4 billion people are distorting the true scale of unemployment and underemployment. "The whole thing to me is really throwing dust in your eyes. You say this is the unemployment rate, the growth rate — quite often, they don't make much sense. We have a massive employment problem and that is not reflected in the data," said Pranab Bardhan, professor emeritus of economics at the University of California, Berkeley. "Most Indian workers are underemployed. If you are able-bodied and you did not work for any time, not even one hour in the last six months, unless you are rich, how did you feed yourself?... So you scrounge around and do something. And then you are employed. Now what does that employment mean?" asked Bardhan. The Periodic Labour Force Survey (PLFS), opens new tab, which estimates India's official employment and unemployment data, counts anyone working even one hour a week as employed. The Ministry of Statistics and Programme Implementation defended the credibility of its labour force data and its representation of India's labour market dynamics, saying the PLFS uses Computer-Assisted Personal Interviews to improve data quality and reduce errors, and noted international agencies use its data in their reporting. While it is difficult to provide an alternate estimate of the jobless rate, 17 experts surveyed did, giving a median of 10%, ranging from 7% to as high as 35%. For years, India published official unemployment rates of around 4%, partly because statisticians counted unpaid family labour and subsistence work as employment. Experts argue this diverges from international norms and makes the jobless rate incomparable with other countries. And it is not just academics and career labour market experts who are concerned about data accuracy. "Unemployment is one of our big challenges and I don't believe the government data reflects the true ground situation," said Duvvuri Subbarao, Reserve Bank of India Governor from 2008-2013. Subbarao said the kind of jobs being created also matters. As high-growth sectors like finance and IT tend to be less labour-intensive, he called for a sharper policy focus on manufacturing, which holds greater potential for large-scale employment. About a quarter of experts polled had no problem with the accuracy of official jobless data. "No one in the world has perfect employment data. People assume the U.S. labour force survey is perfect. It's not. Our PLFS is very robust now. People just don't want to believe it," said Surjit Bhalla, former executive director for India at the International Monetary Fund. But several experts said even if methodologically sound, official figures fail to capture deeper challenges. On its current path, India will take at least two decades to match the female labour force participation rates of other G20 countries, the survey found. A lack of strong job creation is also showing up in stagnating wages. "We are home to some of the big dollar billionaires… the wealth of some of the elite has been growing dramatically over the past decade. But real wages are not growing. Half of the workers are getting less than they got even 10 years ago. To me, these are not signs of a healthy economy," said Jayati Ghosh, professor at the University of Massachusetts Amherst. "We should be prioritising good quality employment generation," she said. Asked what the government should prioritise to create more high-quality jobs, several said improving education and skills, promoting private investment and reducing regulatory hurdles. "Stop selling the narrative that farm jobs growth (is) to be read as jobs growth. Adopt an industrial policy, with a manufacturing strategy that is horizontal in nature, not a PLI type picking winners tactic, that is clearly failing," said Santosh Mehrotra, professor at the University of Bath. PLI (Production Linked Incentive) is a subsidy scheme to boost domestic manufacturing. The government scaled back the scheme just four years after its launch.

In South Korea's 'apple county', farmers beg not to be sacrificed for US trade deal
In South Korea's 'apple county', farmers beg not to be sacrificed for US trade deal

Reuters

time20 minutes ago

  • Reuters

In South Korea's 'apple county', farmers beg not to be sacrificed for US trade deal

CHEONGSONG, South Korea, July 22 (Reuters) - The apples grown in the South Korean county of Cheongsong in the country's southeast are so renowned for their flavour that they are often given out in neatly-packaged gift boxes during national holidays. But apple farmers, who account for about a third of the roughly 14,000 households in the sleepy rural area, worry that their way of life could be under threat from an influx of cheap U.S. imports. Fanning concerns, South Korea's trade minister suggested last week that Seoul could make concessions on some agricultural imports, although he said sensitive items should be protected, as part of any deal to eliminate or reduce punishing U.S. tariffs on cars, steel and other key exports. "U.S. apples are very cheap. We can't compete with them," said Shim Chun-taek, a third-generation farmer who has been growing apples for two decades. He now fears South Korean farmers risk being sacrificed to appease the U.S. and support the country's manufacturing sector. The United States has long called for better market access for its farm products from beef to apples and potatoes. U.S. President Donald Trump in April slammed steep tariffs on rice in South Korea and Japan. South Korea has taken steps to open its market and is now the top buyer of U.S. beef and the sixth-biggest destination for U.S. agricultural exports overall. Still, Washington has complained about persistent non-tariff barriers. South Korea's quarantine agency is still reviewing U.S. market access requests for apples more than 30 years after they were filed, sparking calls by Washington to expedite the approval process for a range of fruits and potatoes. Any opening up of the sector would increase pressure on apple farmers already wrestling with a host of problems, from climate change to an ageing population and wildfires, which have led to rising costs, smaller harvests, and higher prices. Bank of Korea governor Rhee Chang-yong last year said runaway prices of apples and other farm goods were contributing to inflation and that there was a need to consider more imports. The central bank noted South Korea's grocery prices were higher than the average for OECD countries, with apple prices nearly three times higher than the OECD average. "I think it is difficult to justify absolute protection to certain agriculture sectors simply because of its high sensitivity," said Choi Seok-young, a former chief negotiator for the Korea-U.S. free trade deal. It was hard to view the delayed quarantine process as "rational based on science and international norms," added Choi, who is now a senior adviser for law firm Lee & Ko. Agriculture has emerged as one of the sticking points in U.S. trade talks with South Korea and Japan, after countries such as Indonesia and Britain agreed to allow more agricultural imports from the U.S. in recent trade deals. Seoul has long restricted shipments of U.S. beef from cattle older than 30 months. Massive protests from South Koreans worried about safety due to mad cow disease followed a 2008 agreement with the United States to lift the restrictions. Shim, 48, who wakes at 3 a.m. every morning to work on his orchards, said it would be impossible to find alternative crops to grow in the mountainous area. The tariff talks have already fuelled protests from farmers' groups. There could be more to come. "We oppose the imports of apples no matter what," Youn Kyung-hee, mayor of Cheongsong county, told Reuters, adding that people will not "sit still" if Seoul opens up the market. ($1 = 1,391.1000 won)

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store