Monday saw the Japanese yen drop to its seven-month low against the U.S. dollar as elections near in the Pacific Rim nation, Reuters reports.
At issue is the five-year term of Bank of Japan Governor Masaaki Shirakawa closing in April 2013, and the next leader will be tasked with filling that vacancy. The lead candidate, opposition party candidate Shinzo Abe of the Liberal Democratic Party, last week called on the Bank of Japan to perform endless yen printing while also lowering interest rates.
"This is a major shift and the key event is the replacement of Shirakawa," currency research managing director Jens Nordvig with Nomura Holdings Inc. in New York told Bloomberg on Monday. "It really is a change that would move the BOJ away from being the least expansive in terms of balance sheet use to potentially being ahead of the other central banks."
Speculation about additional printing of money, which waters down the value of the yen, has been tugging at the monetary unit.
The central bank of Japan is slated to issue a policy announcement on Tuesday.
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