Yen Likely Won't be Moved by Funding Scandal

News that a second aide to DPJ's Secretary General and king maker Ichiro Ozawa has been arrested in a political funding scandal is not likely to weaken the yen, which is little changed on the day in the NY morning.

Ozawa does not have a public office, but is seen as the power behind the throne. It is possible that Ozawa is called before parliament, but the situation has to escalate, it would appear, for Ozawa to be forced out of the party he was so instrumental in creating.

Support for the DPJ has waned over the last couple of months and recent polls put it below 50. Prime Minister Hatoyama himself had a bit of a tax issue too and the scandals and the weak economy has taken a toll. However, there seems little chance that Hatoyama won't lead the party into the July upper house elections. Nor will the scandal impact the policy outlook in Japan.

Some talk that the latest scandals would weigh on the yen seems exaggerated. The dollar looks capped in the JPY91.20--40 area and appears poised to return to the JPY90.50 area initially and perhaps toward JPY88 over the slightly longer-term.
Yen Likely Won't be Moved by Funding Scandal Yen Likely Won't be Moved by Funding Scandal Reviewed by magonomics on January 15, 2010 Rating: 5
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