JPY Daily News

Government Gridlock May Hurt the Yen

An economic bailout package currently being debated in Japan may be delayed over a dispute between Japanese Prime Minister Aso and Japan's legislative body. The refusal of the Diet to pass a Japanese economic stimulus plan comes at a time when Aso's approval rating stands at an all time low. Aso refuses to call early elections while the Diet will not budge with the stimulus package until a date for the elections is set.

This could have a dire effect on the Japanese economy to overcome the most recent recession. Japanese Interest Rates stand close to 0%. This limits the government's options for tackling the economic crisis or influencing fiscal policy. But the strife between the Prime Minister and the Diet threaten any type of fiscal policy changes. Now that the government is deadlocked in a political stalemate, the economic recovery may be significantly slower than both its neighboring economies.

A delayed economic recovery could spell trouble for the Yen. Forex markets tend to be forward-looking and may begin to depreciate the Yen for suspected economic weakness. Any further delays to a government stimulus package may cost the USD/JPY to rise to back to the 95.00 level in the coming weeks.

Current Time: 05/27 01:16 GMT

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#	Time	$€£¥	Event	Per.	Prev.	Fore.	Act.	Imp.
02/03
	01:30	JPY	Average Cash Earnings	y/y	-0.7%	-1.5%	-1.4%
	05:30	JPY	BoJ Gov Shirakawa Speaks		*	*	*