Yen Rises After Japan’s Opposition Party Wins General Elections

The yen strengthened for a fifth day against the euro after the opposition Democratic Party of Japan won the nation’s weekend general elections, spurring optimism the new government may stimulate the economy.

Japan’s currency gained versus all 16 major counterparts after public broadcaster NHK said the DPJ, led by 62-year-old Yukio Hatoyama, captured at least 308 of the 480 lower-house seats, spurring speculation overseas investors will purchase Japanese assets. The dollar rose for a second day against the pound before a U.S. report that economists say will show the nation’s business activity contracted at a slower pace in August.

“There are expectations that foreigners may flock to Japanese securities such as equities, given the DPJ’s victory,” said Yuji Saito, head of the foreign-exchange group in Tokyo at Societe Generale SA, France’s third-largest bank. “The yen is likely to appreciate.”

The yen climbed to 133.53 per euro as of 9:02 a.m. in Tokyo from 133.85 in New York on Aug. 28. The Japanese currency advanced to 93.32 per dollar from 93.60. The dollar traded at $1.4304 per euro from $1.4303. The U.S. currency was at $1.6262 per pound from $1.6270. It rose to $1.6154 on Aug. 27, the highest level since July 13.

DPJ President Yukio Hatoyama and his party have pledged to boost child-care spending, cut taxes and curtail the power of bureaucrats after they ended the rule of Prime Minister Taro Aso’s Liberal Democratic Party.

‘Yen-Positive’

“The market reaction to the news on the open in Asia has been yen-positive with dollar-yen trading down,” David Watt, senior currency strategist in Toronto at RBC Capital Markets, wrote in a research note dated today.