Yen slumps on Japanese stimulus hopes

[NEW YORK] The yen fell sharply against the US dollar and the euro Monday on rising Japanese stimulus hopes following a landslide victory for Japan's ruling coalition in weekend elections.

After the vote conservative premier Shinzo Abe repeated a pledge for action on a stimulus package to kickstart growth, which Japanese media said could be worth as much as 20 trillion yen (S$263 billion).

The Japanese currency tumbled 2.3 per cent to 102.82 yen per US dollar. It fell 2.4 per cent against the euro to 113.68 yen.

The US dollar, meanwhile, slipped slightly against the euro. But it fell more sharply against the pound as the British currency found some footing after Theresa May was poised to become prime minister on Wednesday.

"The seemingly clearer picture of who will lead Britain out of its historic exit from the European Union helped tamp down political uncertainty to the benefit of the pound," said Joe Manimbo of Western Union Business Solutions.

However, he said, markets are pricing in the chance that the Bank of England will cut interest rates on Thursday "to bolster an economy that could be headed for a Brexit-induced recession over the latter half of 2016."

AFP