Yen Drops as Abe Delays Sales Tax

The yen fell against the euro and touched its weakest in more than seven years against the dollar as Japanese Prime Minister Shinzo Abe called an early election and suspended a planned sales-tax increase.

Japan’s currency slipped against most of its 16 major peers as Abe said he will dissolve parliament on Nov. 21. The euro rallied as German investor confidence rose for the first time in 11 months. Russia’s ruble strengthened as the tax season approaches, while Sweden’s krona rallied.

“Abe has now oriented Japanese economic policy in an ultra-stimulatory direction to a degree that goes well beyond the quantitative easings of other developed economies,” Steven Englander, the New York-based head of Group of 10 currency strategy at Citigroup Inc., said in an e-mail. “For JPY, this is a short- and medium-term negative, but there is some ambiguity over the long term.”

Bloomberg

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