Forex

New Japanese opposition party popular ahead of snap election, yen holds steady

Japanese Prime Minister Shinzo Abe dissolved the lower house of Parliament overnight, in preparation for the snap October election he announced on Monday. However, the leader of the ruling LDP could face a tough fight for the premiership, as a new party gains popularity.

The October 22 election has been called a year before Abe’s current term ends. The early election comes as he seeks to take advantage of a rise in approval from Japanese constituents, following his strong handling of the North Korean tensions.

But, while Abe has enjoyed a 20% rise in the popularity polls, the race to the election finish line isn’t clear. The New Hope Party, led by Yuriko Koike, who is also Tokyo’s first female governor, was formally unveiled Wednesday as an alternative opposition party.

Despite the New Hope Party’s still brief existence, it has already begun to attract some support. Two Japanese newspaper surveys reported some Japanese voters are planning to vote for Koike’s party, when they go to the polls in a little under one-months’ time.

Abe, meanwhile, has told reporters he knows it won’t be an easy victory and is hoping to secure a simple majority. The LDP party currently has a two-thirds super-majority.

Former LDP party member Koike’s policies share some common ground with the LDP. However, some areas where they differ, include two key ones:

  • Where Abe plans to raise the country’s sales tax to 10% from the current 8% level, Koike plans to keep it at 8%.
  • On nuclear power, Abe’s government wants to keep it as part of a mix of the country’s source of power. Koike’s party, meanwhile, is keen to end the use of it.

Since the snap election was called the yen has held its ground pretty well, particularly in the face of dollar strength on the Fed’s Yellen’s rate hike talk and following President Trump’s new GOP tax reforms.

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